Tax Penalty Abatement

It is no secret that the Internal Revenue Service (IRS) assesses substantial civil penalties, fines, and interest when taxpayers violate the federal tax code with respect to the payment of income taxes.  Fortunately, there are situations in which you may be eligible for penalty abatement, a program which helps reduce the amount of penalties that you must pay on your delinquent tax bill.

IRS Penalty Abatement

Penalty abatement refers to circumstances in which the IRS agrees to reduce, refund, or stop the assessment of penalties on a taxpayer’s unpaid taxes.  Generally, in order to qualify for penalty abatement, you must have a legitimate, understandable reason for failing to pay your taxes, or “reasonable cause.”  Some examples of situations that might qualify as reasonable cause for non-payment that might entitle you to penalty abatement would include the death of a family member, serious medical issues, a natural disaster, or a period of unemployment.

The other requirement that you must meet in order to be eligible for penalty abatement is dedication to resolving your unpaid tax debt as quickly as possible.  If you take actions such as voluntarily contacting the IRS in order to work out a payment plan for your tax debt, attempting to make at least partial payments toward your debt since it became due, acting responsibly with respect to your other financial obligations, and other efforts to improve your financial situation.  Some other factors that the IRS might consider in weighing your penalty abatement request include your past history in terms of paying taxes, and your demonstrated commitment to paying your tax debt in full.

Requesting a Tax Penalty Abatement 

You can fill out IRS Form 843 in order to request penalty abatement, although the only requirement is that you simply must request penalty abatement in writing.  You should address your written request to the IRS service center that issued you the written notice of penalties being assessed on your tax debt.  In your written request, you should be sure to fully explain the situation that led to you being unable to file and/or pay your taxes, along with any supporting documentation that you might have.  The IRS appeals officer who is assigned to your penalty abatement request must consider each such request on a case-by-case basis.  This is your opportunity to put a human face on your situation, and explain the reasons behind your inability to pay your tax bill when due.  You also will have the chance to show the appeals officer your plan for resolving the situation.

How a Tax Attorney Can Help

An experienced tax attorney will be able to present your request for penalty abatement to the IRS in the best light possible.  By emphasizing the positive aspects of your situation, and explaining any weaknesses in your case for penalty abatement, an attorney can make it more likely that the IRS will accept your request.  As a result, you can potentially save thousands of dollars in monetary penalties by successfully obtaining penalty abatement on your back taxes.