If you fail to pay your tax debt, it will result in IRS penalties and interest that will compound over the years and make your tax debt substantially larger than it initially was. Non-payment of tax debt can then result in a tax levy on your wages (IRS garnishment), or your bank account, a tax lien against your real property, or seizure of real property (cars, motorcycles, etc.). IRS Penalties can be applied for filing your tax return late, a failure to file tax returns, or for paying your due tax late.
The IRS penalty for filing late is generally 5% each month, or partial month, and can be up to 25% of the amount due on your tax return. There are some situations and circumstances in which you can have your IRS Penalties abated (waived) either partially or in full for one tax year or multiple tax years. To submit A Penalty Abatement request to the IRS, a taxpayer must have a "reasonable cause" that is specific for each year and must be able to explain why the penalties should be removed.
Reducing or Eliminating Delinquent Tax Debt
A taxpayer can not only rid themselves of the penalties with an abatement, but they can dramatically reduce the tax debt (assessed tax debt, penalties, and interest) through the Offer in Compromise program. You do not have to be destitute to qualify for a tax settlement through an Offer in Compromise. The IRS offers an alternative program for reducing delinquent tax debt.
You will only be given one opportunity to have the penalties eliminated. One page needs to be filed detailing the "reasonable cause." Needless to say, that the abatement letter had better be detailed and well crafted. If you are "habitual" then the IRS will reject your plea.
Penalty Abatement - Tax Relief from IRS Penalties falls into four separate categories:
a. Reasonable Cause - a mistake made by the taxpayer, ignorance of the law, death, serious illness, unavoidable absence, or divorce. There are many many "reasonable cause" situations available to you.
b. Statutory Exceptions - simple or complex legislative tax code changes.
c. Administrative Waivers - undue hardship, fire, flood, natural disaster, bad legal/tax advice.
d. Correction of Service Error - mistakes made by the IRS.
Give our IRS problem solvers a call today for more details.
Our consultations will only take 20 to 30 minutes of your time.