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Tax Debt Pros

Penalty Abatement

South Jordan penalty abatement servicesWith penalty abatement, you may be able to eliminate part or all of your penalties and interest, but not the initial base tax amount that caused the penalties and interest. Most of the time with an abatement, you will be able to eliminates the majority if not all of the penalties, but not the interest. Eliminating these penalties may lift a huge financial burden off of you, most of the times penalties make up 25% of the total tax debt amount owed.

Requirements for IRS Penalty Abatement

If an individual meets the requirements of the IRS then it is likely for them to get most or all of the penalties canceled, it is very unlikely for them to get interest canceled though. Interest can only be canceled if it was erroneously applied by the IRS or it was the IRS's fault for lengthy delays that caused extra interest to accrue.

The IRS will accept many different reasons for a taxpayer to abate their penalties. There is really no set formula for penalty abatement and the IRS handles it on a case by case basis. The most common reason that penalties are abated are for "reasonable cause", which really can be any reason as long as the individual can persuade the IRS that their reason was a legitimate reason for not paying or filing taxes.

What the IRS Considers Reasonable Cause?

Reasonable cause really is any excuse that you can prove to the IRS is a completely legitimate excuse for not being able to pay your taxes on time or file. This reason typically is something that is beyond the control of the taxpayer. The IRS also requires that the taxpayer would have taken steps to counter the events that cause them to not file, but there really was no way for them to do so. Below are some common examples that the IRS provides for considering individuals for penalty abatement.

  • Major family problems that you can prove, such as divorce.
  • Death (typically a family member or someone very close to the taxpayer)
  • Unavoidable absence of the taxpayer (e.g: in rehab, in prison, held hostage in another country)
  • Theft or destruction of the taxpayer's place of records
  • A major illness
  • Taxpayer's ability to make deposits or payment had been materially impaired by civil disturbances
  • Incorrect advice from a tax professional (need to be able to show they are considered competent and trusted and that you provided correct information)
  • Bad advice received directly from the IRS (over the phone, in writing or in person)
  • A disaster that was out of your control (hurricane, wind storm, flooding)

In short, you will most likely qualify for an abatement if there were factors that were out of your control that influenced you not to pay your tax debts. Even if you do meet the criteria above, this may not be the right choice for you if you can’t pay generally 70%-90% of the initial tax amount assessed. Most of the time if you have unfiled tax returns, or if the IRS filed a Substitute For Returns on your behalf, you are not going to get your penalties abated.

After you have determined you are a likely candidate to receive this type of relief it is recommended that you work with a tax professional or tax relief service that specializes in helping individuals achieve penalty abatement. Give us a call and we will help you with requesting penalty abatement.

How Do I File for Penalty Abatement?

Before filing for penalty abatement you'll need to be sure you qualify and are able to communicate a convincing argument to the IRS. For assistance, turn to Tax Debt Pros. We understand what types of situations will qualify a taxpayer for penalty abatement and can help you file the necessary paperwork. To learn more or discuss your circumstances, contact us at 801-878-0363 or request a consultation through our website.