Penalty Abatement

Tax Penalties imposed by the IRS can add up extremely fast… sometimes faster than the interest on a credit card.  Penalty abatement is the process of reducing or eliminating penalties imposed by the IRS on your debt.  In some cases, your penalties can outweigh your original tax bill.

In some cases, the IRS will abate a penalty if an IRS error is discovered while assessing the penalty.  Otherwise, the proper IRS paperwork must be filed and a request must be made to either request a refund of a penalty or to ask the IRS to erase a penalty prior to payment.  In general, the IRS will grant abatement for an excessive penalty, if it was imposed after the statute of limitations for penalties expired or if it was erroneous or illegal.   Interest may also be abated for many of the same reasons.   Your tax transcripts must be carefully scrutinized by your Tax Attorney.

Penalty Abatement in most cases will likely turn on “reasonable cause”.  Reasonable cause means that despite “the exercise of ordinary business care and reasonable prudence, you were faced with a situation in which you could not file your tax return, or pay their taxes on time.

A Penalty Abatement letter must be sent when requesting an Abatement.  It is most beneficial that a taxpayer has a good track record with filing their tax returns and paying their taxes on time.