Law Offices of Maryam M. Golbarg, P.C.
Your Tax Relief Attorney
Tax Solutions
Penalty Abatements
When you do not pay your IRS liability in full, you file a tax return late, or fail to deposit certain taxes as required, the IRS will assess penalties against you along with interest on these penalties. Often, these penalties and interest constitute a huge portion of the total tax liability.
You may qualify for relief from penalties, if appropriate and under certain circumstances. Note that the IRS doesn’t abate interest because interest is statutory (charged by law) and will continue to accrue until your account is fully paid. However, if a penalty is removed or reduced, the interest charged on that penalty will automatically be reduced or removed.
The following penalties are eligible to be reduced or completely removed, in certain circumstances:
- Penalties for Failing to file a tax return (5 percent per month, with a 25 percent cap);
- Penalties for Failing to pay on time (0.5 percent per month, with an upper limit of 25 percent);
- Penalties for Failing to deposit certain taxes as required;
- Other penalties as applicable.
Types (Grounds) for Penalty Relief
1. Penalty Relief Due to Reasonable Cause
Reasonable Cause is based on the theory that you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations due to specific facts and circumstances beyond your control. The Request for Penalty Abatement based upon Reasonable Cause is a legal argument discussing the facts and circumstances that caused you to file your tax return late or to not be able to pay the liability or make a deposit.
The IRS will consider any sound reason, if established, for failing to file a tax return, make a deposit, or pay tax when due, including but not limited to: fire, casualty, flood, natural disaster or other disturbances, inability to obtain records, death or serious illness in the family, alcohol or drug addiction, gambling, or incapacitation.
Lack of funds, in and of itself, is not reasonable cause for failure to file or pay on time. However, the reasons for the lack of funds may meet reasonable cause criteria for the failure-to-pay penalty.
2. Penalty Relief Due to Administrative Waiver and First Time Penalty Abatement
You may qualify for penalty relief for failing to file a tax return on time, pay on time, and/or to deposit taxes when due under the IRS first time penalty abatement policy and under the following conditions (perfect or near perfect prior filing and compliance history):
- You didn’t have a filing requirement, or you have no penalties for the three tax years prior to the tax year with a penalty (See Obtain Your IRS transcripts Report);
- You filed all currently required tax returns or filed an extension of time to file;
- You have paid or arranged to pay any tax liability to the IRS.
3. Penalty Relief Due to Statutory Exception
If you received incorrect written advice from the IRS, you may qualify for a statutory exception. The following items may be needed when requesting penalty relief:
- Your written request for advice;
- The erroneous written advice you relied on that was furnished to you by the IRS;
- The report, if any, of tax adjustments identifying the penalty or addition to tax, and the item(s) relating to the erroneous advice.
We have successfully obtained Penalty Relief for our clients. The Penalty Relief can save you a substantial amount of money. Please contact us to evaluate if you qualify for a Penalty Relief.
