It"s Possible to Abate Penalties
If you owe the IRS tax debt, you probably cannot pay it, as well as the penalties and interest that were automatically added to it by the IRS computer system.
Depending on the personal situation, there are options around this IRS problem.
Reasonable Cause If you can prove reasonable cause, the IRS may lessen or abate your penalties.
What does reasonable cause mean? The IRS's definition is: "reasonable cause relief is generally allowed if the person practices ordinary business care and prudence in determining his tax obligations but isn't able to meet those obligations".
By proving to the IRS in logical and legal ways that you tried to pay your taxes by the deadline but was prevented by circumstance, you're showing reasonable cause.
Here is a list of some of the events that the IRS considers reasonable cause:
Penalty Abatement Request If you receive a bill with penalties, reply promptly and ask for an abatement.
You can write your own letter or fill out IRS Form 843 (Claim for Refund and Request for Abatement).
Remember to include a copy of your notice showing the penalties and documents supporting your reasonable cause.
If possible, attach payment of the debt which includes a note specifying that the payment is to go toward the tax and not the penalties and interest.
You can also make a note of this on the check.
(If you settle the tax, the interest will stop accumulating.
) Subsequent billings may be served before you get a reply, so make many duplicates of the abatement request and its supporting documents.
Remember that you'll be unable to file another request with the same reason if your penalty abatement request is denied.
Depending on the personal situation, there are options around this IRS problem.
Reasonable Cause If you can prove reasonable cause, the IRS may lessen or abate your penalties.
What does reasonable cause mean? The IRS's definition is: "reasonable cause relief is generally allowed if the person practices ordinary business care and prudence in determining his tax obligations but isn't able to meet those obligations".
By proving to the IRS in logical and legal ways that you tried to pay your taxes by the deadline but was prevented by circumstance, you're showing reasonable cause.
Here is a list of some of the events that the IRS considers reasonable cause:
- Acts of God
- Fire, natural disaster, casual, or other disturbance
- Wrong advice from the IRS
- Tax professional provided wrong advice
- Records weren't obtained
- Death, serious sickness, or unavoidable absence
- Forgetfulness
- An error was made
- Ignorance of the law
Penalty Abatement Request If you receive a bill with penalties, reply promptly and ask for an abatement.
You can write your own letter or fill out IRS Form 843 (Claim for Refund and Request for Abatement).
Remember to include a copy of your notice showing the penalties and documents supporting your reasonable cause.
If possible, attach payment of the debt which includes a note specifying that the payment is to go toward the tax and not the penalties and interest.
You can also make a note of this on the check.
(If you settle the tax, the interest will stop accumulating.
) Subsequent billings may be served before you get a reply, so make many duplicates of the abatement request and its supporting documents.
Remember that you'll be unable to file another request with the same reason if your penalty abatement request is denied.