What Is a Penalty Abatement?

Penalty abatement means that you may receive an administrative waiver for a penalty applied to you by the IRS. If you failed to file your tax return on time, did not make a payment or encountered another tax filing error, you may be facing a penalty for the action. However, in select cases, the IRS may provide penalty abatement, in which your penalty fees will be waived.

Many different events can lead to your receiving a penalty, and exploring all your options for administrative relief is vital. When you partner with Polston Tax, we can identify your best opportunities to handle your penalty from the IRS.

Why Would You Have a Penalty Assessed?

You may have a penalty assessed for many reasons. As a matter of fact, the IRS has the ability to assess over 140 different penalties. While we always recommend that you pay your taxes on time, life’s troubles can often prevent that from happening. When life throws you a curveball, you can file a Penalty Abatement Request. Many circumstances will fall under reasonable cause. Some of these include:

• Death in the family
• Serious illness
• Unable to obtain records
• Incorrect advice from a tax adviser
• Fire, Tornado, Flooding, or other natural disaster

This is not a complete list because there are a multitude of reasons that could fall under reasonable cause depending on your circumstances. But the Internal Revenue Service is not going to automatically give you IRS penalty relief – you must ask! Around one-third of all penalties imposed by the IRS are later abated, meaning you might have more of a chance to have your penalties abated than you previously thought.

What Is the Purpose of Abatement?

Abatement can help you get rid of the penalties imposed on you when you were unable to pay taxes. Most penalties are incurred on unintentional infractions frequently caused by incorrect advice or financial constraints on the filer. The following three penalties make up a total of 74% of all IRS penalties, and we have the knowledge and experience to help you challenge them:

• Failure to deposit penalty — 7%: This penalty applies to businesses that have not paid employment taxes by the deadline or have filed them incorrectly.
• Failure to file penalty — 14%: This applies to all who fail to file their taxes before the annual or quarterly deadline.
• Failure to pay penalty — 56%: This relatively common penalty is imposed on those who fail to pay their taxes before the annual deadline.

When you choose tax abatement solutions, you have the opportunity to avoid these penalties and move forward without hassle from the IRS. 

How Do You Qualify for Abatement?

Many taxpayers may also qualify for a First Time Penalty Abatement if this is their first time having overdue taxes. The First Time Penalty Abatement waiver helps those who have clean IRS compliance histories for the past three years and have accrued penalties due to failure to deposit, failure to file or failure to pay. No matter how high your penalty amount is, we can still help you file a First Time Penalty Abatement.

If you do qualify for First Time Penalty Abatement (FTA), you may receive administrative relief for an otherwise applicable penalty due to a tax liability with the IRS. You may be eligible for abatement if you meet the following criteria:

• You have arranged to pay or have completed payments for any taxes due to the IRS.
• You have not needed to file a return or had no penalties for three tax years prior to the year you received a penalty.
• You correctly filed returns or filed for a time extension to complete returns.
• You received incorrect oral advice over the phone or in-person from the IRS.

Until you pay the tax amount in full, your failure-to-pay penalty may continue to accrue. In some situations, you may have an advantage by waiting to request first-time penalty relief until after you have fully paid the taxes owed.

Best Practices for Tax Abatement

If you face a tax penalty, keep in mind some essential best practices to request abatement:

• Wait to pay the penalty: Your first step is to leave the penalty unpaid until you’ve explored all your options for abatement. Paying could appear to be an admission of liability, so hold off on that step.
• Always use FTA: If possible, always try a First Time Penalty Abatement first. Regardless of reasonable cause for a penalty, taxpayers without previous liabilities can use this abatement policy. You can make your FTA request by phone.
• Request reasonable cause in writing: To get documentation of reasonable cause, ensure you get the information in writing and not simply over the phone. You may complete Form 843: Claim for Refund and Request for Abatement and include your reasoning for your reasonable cause request.
• Appeal adverse rulings: Often, the IRS penalty may not evaluate the taxpayers’ entire financial situation. A reasonable cause request may be rejected, but you may be able to prove that you are justified with further review with a live person.
• Include the right information: When you fill out your reasonable cause abatement request, ensure you establish circumstances outside your control that caused noncompliance, and furnish proof that this event affected your life in other ways as well. For instance, if you experienced an unexpected illness, provide a doctors’ note and demonstrate you were also not able to work.
• Demonstrate prior compliance: Provide evidence that you have a history of compliance and emphasize a positive compliance record to help gain favor for your current return.
• Follow up on abatement requests: Requests are sometimes lost within the IRS, so ensure you track yours and check if the agency is actively working on your submission.

As you begin the process, the most crucial step you can take is getting skilled assistance to help you navigate complex requirements. When you work with Polston Tax, we’ll handle legal issues and communicate with the IRS to help you get a swift resolution.

Get Relief for IRS Penalties

If your liability spans multiple years, you will want to use this penalty relief on the largest penalty you can. Your chances of getting a Penalty Abatement approved are much higher if you hire an experienced tax professional – let us help you!

At Polston Tax, we understand the complexities of tax law, and we bring in-depth insight and two decades of experience to serve our clients. Tax law is the only service we provide, so we’re fully committed to handling these negotiations and bringing resolution to your case.

For each case, we have a team approach, so you have a group of professionals behind you every step of the way. From a tax attorney to a case manager to a tax preparer, our team will be able to meet your specific needs as quickly and effectively as possible.

We work with the IRS every day, managing many different cases, so we know the right strategies and negotiation approaches to handle your situation. From start to finish, we’ll be on your side until we close the case. Whether that means appealing a decision, helping you file forms or confirming with the IRS, we’ll do what it takes to solve your tax issues. We offer free consultations to help you understand our services and how we can help you.

Contact us today by calling 844-841-9857 or by filling out the Contact Form below.