IRS Penalty Relief
The IRS has
over 150 penalties of different types that it assesses against taxpayers. The addition of penalties to an
already large tax bill can increase the size of the tax debt exponentially. Fortunately there is a procedure
for IRS penalty relief also known as penalty abatement
If you feel
that you have been assessed IRS penalties unfairly due to circumstances beyond your control, then you may
have grounds for requesting IRS penalty relief. The IRS uses the term "reasonable cause" to describe this
situation. Following are some examples of reasonable cause given by the IRS:
(1) Death or serious illness of the taxpayer or
a death or serious illness in his/her immediate family.
(2) Unavoidable absence of the
taxpayer.
(3) Destruction by fire or other casualty of
the taxpayer's place of business or business records.
(4) Taxpayer was unable to determine amount of
deposit or tax due for reasons beyond the taxpayer's control.
(5) The facts
indicate that the taxpayer's ability to make deposits or payments has been materially impaired by civil
disturbances.
(6) Lack of funds is an acceptable reasonable
cause for failure to pay any tax or make a deposit under the Federal Tax Deposit System only when a taxpayer can
demonstrate the lack of funds occurred despite the exercise of ordinary business care and
prudence.
Other situations that may qualify as reasonable
cause include:
(7) Incarceration or being detained outside of
the country such as being sent to a combat zone.
(8) Some penalties may be abated if they were
assessed while you were in a bankruptcy.
There are many more situations that may qualify as reasonable cause.
A tax attorney should be retained to help you with ideas that may qualify for
IRS penalty relief.
If you are denied the request for IRS penalty removal, you can appeal the decision. Even if
the Appeals employee denies the request, you have the option of paying the penalty and filing a claim for
refund.
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