Am I Eligible for an IRS Tax Penalty Abatement?
Taxpayers demonstrating reasonable cause for failure to comply with their tax obligations may qualify for penalty abatement. Several factors outlined in the Internal Revenue Services manual are used as a basis to challenge tax penalties.
The IRS assesses penalties to enforce compliance with tax laws. The IRS strives to motivate taxpayers to meet their tax obligations. However, they also provide tax relief for those demonstrating reasonable cause.
Taxpayers should provide a clear explanation supporting their request when applying for a penalty abatement. They need to ensure the claim aligns with the dates and circumstances on which the penalties were based. The IRS will then evaluate the taxpayer’s tax history. They examine the time the taxpayer took to become compliant and whether the taxpayer had control of the situation.
Situations like death, serious illness, or unavoidable absence are favorable for taxpayers seeking a tax penalty abatement. In these cases, individuals have a better chance of making their case.
The IRS commonly considers penalty abatement based on the following circumstances. These circumstances include mistakes, inability to obtain records, undue hardship, incorrect advice, errors by the IRS, and situations involving fire, flood, or casualty. Ignorance of the law will usually not help you win a penalty abatement claim. Similarly, forgetfulness and mistakes may not help either.
Not all claims are guaranteed to be approved. Each case is unique. If you have a reasonable cause, we recommend discussing your circumstances with a tax professional. They can guide you through the process and help you prepare the necessary documentation to support your claim.