What tax penalty abatement do you qualify for?

Many people don't know that the IRS allows tax penalty abatement for penalties and interest or a refund if you experienced extenuating circumstances that prevented you from filing your tax return.  To qualify for abatement, you must show the IRS that you had a “reasonable cause”. You cannot pay your income taxes based on the facts and circumstances of your case.

For example, here are some of the most common reasonable causes for abatement:

  • Embezzlement or theft issues
  • Unforeseen disasters (fire, flood, hurricane, etc.)
  • Relied on poor accounting practice or tax advice
  • Serious personal health conditions
  • Serious health conditions of an immediate family member
  • Death of a family member

Additionally, you must proof to the IRS that you did your “due diligence”. You were not "negligent” in attempting to repay the income tax debt that you owed.

Penalty Relief Due to First Time Penalty Abatement or Other Administrative Waiver

The IRS may provide administrative relief from a penalty that would otherwise be applicable under its First Time Penalty Abatement policy.

Under the Service's First Time Penalty Abatement policy, you may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due if the following are true:

  • No filing requirements for prior years tax returns or no penalties assessed for the 3 tax years prior to the tax year in which you received a penalty.
  • Current with all tax returns filing requirements or filed an extension of time to file.
  • Paid or arranged to pay taxes due.

The failure-to-pay penalty will continue to accrue, until the tax is paid in full. It may be to your advantage to wait until you fully pay the tax due prior to requesting penalty relief under the Service's first time penalty abatement policy.

Other administrative relief: If you received incorrect oral advice from the IRS, you may qualify for administrative relief.

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