There are many reasons why taxpayers are assessed IRS penalties. Sometimes taxpayers have miscalculations, unwarranted deductions, late filings, or unexpected or forgotten taxable income. Below are a couple of options taxpayers should consider obtaining relief from IRS tax penalties.
First Time Abatement Waiver
Many people who receive notices from the IRS are unaware of this underused program for the abatement of penalties, which is for taxpayers who have not had problems with their taxes in the recent past and who meet the following criteria:
- You have not had to pay any tax penalties for the 3 years prior to the tax year in which you received the penalty
- You have filed all currently required returns or filed for an extension of time. In our experience, the IRS will generally allow the abatement once you filed the return even if the late return is the cause of the penalties that you are attempting to waive
- You have paid, or arranged to pay, any tax due. As part of this waiver program, you must bring your account current. This waiver does not work if you are unable to pay the existing tax liability that leads to the penalty
- To obtain relief under the first-time abatement of the penalty waiver program a written statement should be provided to the IRS. The tax attorneys at Pearson Butler have been very successful with this first-time abatement of penalties program
Reasonable Cause Waiver
In conjunction with the first-time abatement of penalties request, the taxpayer may also request an abatement of the penalties based on the “reasonable cause” exception. The reasonable cause exception is more difficult to obtain due to the limited scope of reasons the IRS will accept as reasonable cause. Some of the reasons for this abatement that the IRS has on its website include the following:
- Fire, casualty, natural disaster or other disturbances
- Inability to obtain records
- Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family
- Other reason which establishes that you used all ordinary business care and prudence to meet your Federal tax obligations but were nevertheless unable to do so
Due to most taxpayers being cash basis taxpayers who generally incur tax
liability only in years when a taxpayer actually or constructively receives
money, the IRS is very clear that a lack of money, in and of itself, is
not a reasonable cause for failure to file or pay on time.
There are many reasons why taxpayers are assessed IRS penalties. Sometimes taxpayers have miscalculations, unwarranted deductions, late filings, or unexpected or forgotten taxable income. Below are a couple of options taxpayers should consider obtaining relief from IRS tax penalties.
First Time Abatement Waiver
Many people who receive notices from the IRS are unaware of this underused program for the abatement of penalties, which is for taxpayers who have not had problems with their taxes in the recent past and who meet the following criteria:
- You have not had to pay any tax penalties for the 3 years prior to the tax year in which you received the penalty
- You have filed all currently required returns or filed for an extension of time. In our experience, the IRS will generally allow the abatement once you filed the return even if the late return is the cause of the penalties that you are attempting to waive
- You have paid, or arranged to pay, any tax due. As part of this waiver program, you must bring your account current. This waiver does not work if you are unable to pay the existing tax liability that leads to the penalty
- To obtain relief under the first-time abatement of the penalty waiver program a written statement should be provided to the IRS. The tax attorneys at Pearson Butler have been very successful with this first-time abatement of penalties program
Reasonable Cause Waiver
In conjunction with the first-time abatement of penalties request, the taxpayer may also request an abatement of the penalties based on the “reasonable cause” exception. The reasonable cause exception is more difficult to obtain due to the limited scope of reasons the IRS will accept as reasonable cause. Some of the reasons for this abatement that the IRS has on its website include the following:
- Fire, casualty, natural disaster or other disturbances
- Inability to obtain records
- Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family
- Other reason which establishes that you used all ordinary business care and prudence to meet your Federal tax obligations but were nevertheless unable to do so
Due to most taxpayers being cash basis taxpayers who generally incur tax
liability only in years when a taxpayer actually or constructively receives
money, the IRS is very clear that a lack of money, in and of itself, is
not a reasonable cause for failure to file or pay on time.
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