Tax Relief Counsel:

IRS Penalty Abatement

IRS Penalty Abatement Lawyer in Washington, D.C.

If you are unable to pay your Federal taxes on time, you may face penalties from the IRS that could lead to serious consequences. These penalties might include losing your property or even going to jail. If you have received an IRS penalty, it’s important to speak with our IRS penalty abatement lawyer in Washington, DC as soon as possible. Tax Relief Counsel is dedicated to assisting individuals and businesses in resolving all types of IRS tax debt-related problems not only in DC, Maryland, and Virginia but throughout the US. Contact our office today for a free virtual conversation to speak with our experienced tax attorney and better understand your options.

IRS Penalty Abatement

Penalties Eligible for Debt Relief

Failure to File Penalty

Taxpayers can incur a penalty for failing to file their tax return by the due date or extended due date. The Failure to File Penalty is calculated as 5% of any unpaid taxes for each month that the tax return is late, with a maximum penalty of 25%.

If you file your tax return more than 60 days after the due date or extended due date, the minimum late filing penalty would be either $435 or 100% of the unpaid tax amount, whichever is lesser. In addition, you may have to pay a failure-to-pay penalty, which is usually 0.5% per month of unpaid taxes.

Failure to Pay Penalty

Taxpayers can also incur a penalty for failing to pay the full amount owed even when they file their taxes on time. The penalty is 0.5% of the unpaid taxes owed for each month the tax remains unpaid, with a maximum penalty of 25% of your unpaid taxes. Penalties for late payments are the most common. If you incur both a Failure to File Penalty and Failure to Pay Penalty, the combined penalty will be 5% for each month.

IRS Penalty Abatement Provisions

First-Time Abatement

The First-Time Abatement (FTA) penalty waiver permits a taxpayer who is non-compliant for the first time to ask for the cancellation of specific penalties for that tax period. An FTA waiver can be used for three kinds of penalties: Failure-to-Pay, Failure-to-File, and Failure to Deposit penalties. Taxpayers may receive administrative relief for their penalties if they have a history of “good tax compliance” and meet the following criteria:

  • Filed the same type of tax return for the past 3 years before the penalty was assessed, and
  • Did not receive any penalties during the past 3 years (or the penalty was removed for a reason other than a First-Time Abatement)

Reasonable Cause

To avoid penalties from the IRS, taxpayers can claim Reasonable Cause if they have a justifiable reason for not being able to pay or file taxes on time. It’s important to first verify the accuracy of any notice received and address any issues that can be resolved. Reasonable Cause circumstances may include situations such as difficulty obtaining tax records, natural disasters, serious illness, or death in the family.

It’s critical to work with an IRS penalty abatement attorney to prepare a Form 843 Claim for Refund and Request for Abatement to correctly present your situation and argue for a reasonable cause abatement. Having an experienced tax lawyer in your corner increases your chances that the request will be accepted.

Statutory Exception

If you receive a notice that has incorrect information, you may be eligible for a statutory exception. To request relief from the penalty, you need to have three documents: written advice from the IRS, the tax adjustment report (if applicable) that identifies the penalty, and your request for advice. You must file a Claim for Refund and Request for Abatement (Form 843) to request penalty relief in these cases.

If you’re considering applying for IRS penalty abatement, seeking professional help can increase the likelihood of success. Tax Relief Counsel has a highly qualified legal team that can represent your case and assist you in finding the optimal solution. Our skilled IRS penalty abatement lawyer in Washington, DC can offer support and guidance throughout the difficult process of dealing with the IRS. Contact us today to discuss your case and discover how we can help you attain financial freedom.

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IRS First Time Penalty Abatement Considerations

Before requesting an IRS First Time Penalty Abatement, there are certain factors to consider as not everyone is eligible.

These considerations include:

  • Clean Compliance History – If you have had penalties on your record, except for estimated tax penalties, in the past three years, you will not qualify for penalty abatement. However, if you have been granted reasonable cause relief before, you are still eligible for the IRS first-time penalty abatement.
  • Filing Compliance – To be eligible, you need to have filed all the necessary tax returns as per requirements. If you have failed to file returns and have an unresolved tax issue with the IRS, your chances of qualifying will be reduced.
  • Payment Compliance – To comply with regulations, you need to have either paid your taxes in full, set up an installment agreement, or made arrangements for payment with the IRS.

Before applying for an FTA, it’s crucial to meet with an experienced tax lawyer. This will help ensure that you’re fully prepared and confident before making any significant decisions or agreements with the IRS. If you’re wondering whether you qualify or not, our IRS penalty abatement attorney can provide the necessary help for you to succeed.

Penalty Forgiveness May Also Extend to Interest

If you don’t pay your taxes, the IRS will charge you interest and penalties. The longer you wait to pay, the more interest and penalties you will accumulate, which can end up being more than the original tax bill. If the IRS reduces the penalties or the tax bill itself, any interest that accrued on that amount will also disappear, but you will still need to pay interest on the remaining amount.

Frequently Asked Questions

How Does IRS Penalty Abatement Work?

The IRS can forgive penalties for not filing tax returns or not paying taxes if the failure was due to reasonable cause and not willful neglect, as authorized by the Internal Revenue Code. However, the decision to forgive penalties is made individually for each case.

If you couldn’t file your tax return on time despite taking reasonable care, it’s considered a reasonable cause for the delay. Similarly, if you couldn’t pay your tax liability despite exercising ordinary business care, it could be a reasonable cause for the failure to pay. In such cases, the IRS may not impose a penalty if they find that the failure was not due to willful neglect, but you’ll still owe the tax amount and the interest on it.

What Does the IRS Consider as Reasonable Cause?

To avoid penalties from the IRS, reasonable cause is one of the most common defenses. However, there is quite a bit of nuance to this general topic and it’s important to understand if you’re truly eligible or not. Below is a list of reasonable cause events that can allow you to qualify:

  • Serious Illness
  • Death of a family member
  • Incorrect Advice from a competent tax professional
  • Incorrect advice directly from the IRS
  • Fire, Casualty, Natural Disaster, Other Disturbance
  • Acts of God
  • Major family problems
  • Theft or destruction of your records
  • Major disruption to your life

How to Request Abatement of Tax Penalties?

The IRS does not offer a specific form for requesting penalty abatement. The process for removing penalties is more intricate and varies depending on various factors. Some cases may only require a phone call, while others may require a detailed written letter or even a refund claim. There are also some situations where the only solution is to take legal action against the IRS. It’s important to note that there are often specific deadlines to meet for these remedies.

Our experienced IRS penalty abatement lawyer can help navigate the nuances associated with each penalty. By doing so, we can find the appropriate method to get the penalty abated. This can increase the chances of the IRS responding promptly and favorably to the request.

In FY 2022, the IRS collected more than $98.4 billion in unpaid assessments on returns filed with additional tax due, netting about $58.8 billion after credit transfers.

Contact Our IRS Penalty Abatement Lawyer in Washington, DC Today

If you’re facing penalties for not paying your taxes, you might be wondering what you can do to avoid further action from the IRS. Fortunately, an accusation of non-payment doesn’t always lead to permanent penalties, and most taxpayers can fix the issue without assistance. If you owe $50,000 or more in taxes, you might be able to reduce or eliminate IRS penalties by showing evidence of your past payment history, current payment of taxes owed, and future payment plan. To learn more about your options, get in touch with our IRS penalty abatement lawyer in Washington, DC. Tax Relief Counsel offers free virtual consultations to better understand your situation and how to best proceed.


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