Penalty Abatement
The Penalty Abatement Is The IRS's Get Out Of Jail Free Card.
Yes, The IRS Does Have Some Compassion
One of the additional burdens of running afoul of the IRS is the unending accrual of interest and the addition of penalties. In many cases, the interest and penalties more than double the size of the original tax debt. At the Connecticut Tax Resolution Service, we can provide you with a potential option.
It Is Called A Penalty Abatement, Not An Interest And Penalty Abatement
Let’s start by saying three items can potentially be abated:
- A failure to File penalty
- A failure to Pay penalty
- A failure To Deposit Payroll Taxes penalty
As you can see, interest accrued is not on that list and it will not be abated.
Did You Have A “Reasonable Cause” For The Penalty?
Unless this a first time penalty (we will get to that shortly), you must have a reasonable cause for the IRS to consider a penalty abatement and the evidence must be submitted to the IRS to support this reasonable cause. Per the IRS guidelines, the following would be considered a reasonable cause:
- Reliance on a tax professional
- Ignorance of tax law
- Medical illness (personal or a family member)
- Natural disasters
- Significant financial hardship
- Death in the family
The First Time Penalty Abatement (FTA)
Very simply, if you have a clean penalty history for the prior three years, you would be eligible for a FTA if your penalty fails into one of three categories listed above. Only the earliest penalty year or quarter is abated, not all years or quarters. This truly is the IRS’s get out of jail free card.
In This Section:
Schedule a Free 30 Minute Consultation
Take the first step towards peace of mind and set up a half hour consultation now. Doing nothing is the worst choice you can make.