Are you facing an IRS penalty? Are you eligible for an IRS penalty abatement? If so, consider the five things discussed in this blog. Knowing the criteria for an IRS penalty abatement will help you make the best decision for your situation. The IRS has certain conditions and requirements that must be met to be eligible for a penalty abatement. By understanding these criteria, you can ensure that you take the right steps to reduce or eliminate your IRS penalties.
What Is an IRS Penalty Abatement?
An IRS penalty abatement is a reduction or elimination of a tax penalty imposed by the Internal Revenue Service (IRS). Penalty abatement may be granted for various reasons, including responsible tax filing, reasonable cause, and other mitigating factors.
The IRS considers the taxpayer’s history and current financial situation when determining whether or not to grant a penalty abatement. If a taxpayer can demonstrate that they meet the criteria for a penalty abatement, they may be able to reduce or eliminate their tax penalty.
Who is Eligible for an IRS Penalty Abatement?
To be eligible for an IRS penalty abatement, the taxpayer must meet certain criteria. Generally, the taxpayer must have filed their taxes in a timely fashion, have a history of responsible tax filing, and demonstrate that they have taken steps to rectify any errors or omissions. Additionally, the taxpayer must demonstrate that the tax penalty was caused by an unusual circumstance or an event out of their control.
Five Things to Consider When Determining Eligibility
When determining eligibility for an IRS penalty abatement, there are five important factors to consider:
- Reasonable Cause: The IRS may consider the reasonable cause an eligible factor for penalty abatement. This includes mistakes, reliance on incorrect advice from a tax professional, and other factors outside the taxpayer’s control.
- Filing of Tax Returns: The taxpayer must have filed all required tax returns to be considered for penalty abatement. This includes any returns that were due before the penalty was assessed.
- Payment of Tax Due: The taxpayer must have paid any tax due to be considered for a penalty abatement. This includes any taxes due before the penalty is assessed.
- Extenuating Circumstances: The IRS may consider extenuating circumstances as an eligible factor for penalty abatement. This includes financial hardship, medical conditions, and other factors outside the taxpayer’s control.
- Taxpayer Compliance: The taxpayer must demonstrate a history of compliance with the tax code, including filing all required returns and paying any taxes due promptly.
What are the Requirements for an IRS Penalty Abatement?
To be granted an IRS penalty abatement, the taxpayer must meet certain requirements. First, the taxpayer must demonstrate that an unusual circumstance or event caused the penalty out of their control. Additionally, the taxpayer must have a history of responsible tax filing and must have taken steps to rectify any errors or omissions.
How to Request an IRS Penalty Abatement
If you believe you are eligible for an IRS penalty abatement, you should contact the IRS and request an abatement. The process of requesting an abatement can be complicated, so it is important to ensure that you follow the proper procedures. Generally, the taxpayer must submit a request in writing and provide evidence that they meet the criteria for a penalty abatement. Additionally, the taxpayer must demonstrate that an unusual circumstance or event caused the penalty out of their control.