It’s Possible to Abate Penalties
If you owe back taxes, you must know that your bill keeps growing due to penalties and accrued interest. If you could not pay your original tax bill, why would the IRS think you can now with these additions? Penalties are automatically added by the IRS computer system to your bill. Your personal circumstances are unknown to the IRS. This IRS issue can be handled with certain options.
Proving Reasonable Cause
When a taxpayer shows reasonable cause, meaning he practices prudence and care in settling his obligation but is simply unable to abide by them, the IRS may eliminate or reduce penalties.
By proving to the IRS through logical and legal means that you tried to settle your taxes by the deadline but was prevented by circumstance, you’re showing reasonable cause.
The cases that the IRS accepts as reasonable cause are:
- Ignorance of the law
- An error was committed
- Forgetfulness
- Serious illness, death, or unavoidable absence
- Records weren’t obtained
- Tax professional gave incorrect advice
- Wrong advice from the IRS
- Natural disaster, casualty, fire, or other disturbance
- Acts of God
As long as you practiced business care and prudence and was still not able to meet your tax obligations, the IRS will accept any reason.
Penalty Abatement Request
By writing your own letter or accomplishing a Form 843, known as Claim for Refund and Request for Abatement, as well as including documentation that support your reasonable cause, you can request for an abatement promptly if you receive a tax bill that includes penalties. If you include payment, include a note specifying that the payment is for the tax, not for penalties and interest, and note this on the check itself. You may receive subsequent bills before you get a reply, so make copies of the request.
Bear in mind: If your penalty abatement is refused, you can’t send another request on the same grounds.
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