Tax penalties and interest can quickly escalate to an unmanageable amount. The IRS has guidelines on how this may be resolved quickly and easily.
The first and easiest way to abate a penalty is the “One Time Abatement” clause. If as a taxpayer, you have not incurred any penalties in the last 3 years, IRS will give you a courtesy abatement when asked.
If this is not possible, Current IRS rules allows for tax penalty abatement of tax penalties and of interest or of a refund when there were extenuating circumstances contributing to this problem. In order to accomplish this, we will need to show the IRS that you had “reasonable cause” for not paying your income taxes or filing your return.
What qualifies as reasonable cause? It depends on the circumstances involved. The IRS procedures for deciding who qualifies for tax penalty abatement and for what reason seem to differ in each case. As in many situations with the IRS, the directions are not clear and concise. The following are just a few of the more common reasons for penalty and interest abatement:
- If you are involved in embezzlement or theft.
- Fire, flood, or other disaster beyond your own control.
- Bad accounting practice or bad tax advice.
- Serious personal health issues.
- Serious health issues of an immediate family member.
- Death of a family member
We must show the IRS that you showed “due diligence” and “no neglect” in attempts file your return and to repay the income tax debt that you owe.