If you have rising penalties due IRS tax debt, IRS penalty abatement could be a viable option for getting this debt eliminated. Penalty abatement is the process of forgiving these debts that is appropriate when the debtor has expressed a desire to rectify the situation and has reasonable cause for not paying his debt on time.
What is Reasonable Cause?
When determining eligibility for a penalty abatement, reasonable cause means that there is a legitimate reason why you didn't pay your taxes on time:
- If you fully intend to pay taxes and you house is hit by a tornado; you have a pretty decent chance at receiving penalty abatement.
- A good way to lay out your case for penalty abatement is to write narrative expressing the circumstances that resulted in you failure to pay your taxes on time. If your letter to request penalty abatement evokes emotion or can make someone cry, you probably have a reasonable cause.
- Other notable cause for penalty abatement can include; drug or alcohol addiction, drug or alcohol rehab, or a terminal illness in the family such as AIDS, cancer, advanced hepatitis C or a disease of an equally serious nature.
How Long is Too Long?
When requesting penalty abatement, you will want to do it as soon as you possibly can. If you wait a long time to request penalty abatement, your chances of having your claim approved will be greatly diminished... but that’s not to say it is impossible. In some extreme situation a penalty abatement request that waits as long as 10 years will be approved, but it is far from the norm. Typically a penalty abatement request should be filed with in the 1-4 years following the circumstances that resulted in payment failure.
Each Year is Separate
It is also notable to mention that year taxable year is independent each other. So if you are in a situation where you owe back taxes and have penalties on a few different year, you will need to request penalty abatement separately for each year. If the circumstances leading to your failed payments carries over the course of a few years it may be a good idea to speak with an attorney to resolve the situation. Otherwise, do not be surprised when a couple years receive penalty abatement and other are denied.
Getting Help
The assistance of an experienced tax attorney is invaluable when requesting IRS penalty abatement. Your attorney can help you to appeal to the IRS and to create a convincing case that will make the IRS believe you really do deserve the penalty abatement.
