Have IRS Tax Penalties? We Can Help You Erase Them

Have IRS Tax Penalties? We Can Help You Erase Them

• Dec 01, 2021

Owing taxes can be difficult enough. But to add to that burden, the IRS will quickly begin to add penalties and fees the moment your taxes become overdue. These penalties can turn an otherwise manageable tax debt into a burden that feels impossible to overcome. If you’ve had tax penalties heaped on top of your existing tax debt, is there anything you can do about it? The answer is yes, and we can help. Here’s how.

First Time Penalty Abatement

Receiving abatement for your penalties is much easier if this is your first time being late on your taxes. The IRS frequently provides relief from penalties under its First Time Penalty Abatement policy. This policy can provide taxpayers with some much-needed relief and a reduction in what you owe, based on your past payment history with the IRS. Keep reading to find out the qualifications for this program.

No Penalties for 3 Tax Years

The first qualification you must meet for the First Time Penalty Abatement program is a history of tax payment to the IRS. This means having no tax penalties for the three tax years prior to the one for which you’re seeking abatement. This also applies to individuals who have no tax history with the IRS; if you’re a young adult filing your own return for the first time, you would still meet this requirement.

Based on this qualification, taxpayers can reasonably receive “first time” abatement of their penalties when it is not actually the first time that they’ve been late on their taxes.

Filed Currently Required Returns

Additionally, you must have filed all currently required tax return, or filed an extension of time to file. For example, let’s say you’re seeking abatement for penalties on your 2019 tax return. You would not qualify if your 2020 tax return was still unfiled. Or, if you begin seeking abatement after your 2021 tax return was due, you could file an extension that would push your tax deadline to October. This would allow you to qualify for abatement without having your full 2021 return filed.

Paid Taxes Due

You cannot ask for penalty abatement on taxes that you have not yet paid, or have not yet made arrangements to pay off. If you need an IRS payment plan to help you manage this tax debt, we can help you to find a program that meets your needs and that you are most likely to qualify for. Once you have established an IRS payment plan, you may be able to request penalty abatement.

However, generally speaking, the IRS will want you to wait until your payment plan has been completed. Then, assuming you meet the above-mentioned criteria, you will typically qualify to have your penalties removed.

What about Interest Relief?

Unfortunately, the IRS will not typically allow abatement of accrued interest on a tax debt. Even if you’re on an IRS payment plan, interest will continue to accumulate on any amount you owe every month. This amount will need to be completely paid off for your account to be considered paid in full.

If there is interest accrued on a penalty or fee, however, that interest can be reduced or removed when you receive penalty abatement. It is important that you address this amount specifically when requesting penalty abatement. If you don’t, that unpaid balance will remain on your account and continue gather interest until it is paid in full.

How We Can Help

While receiving abatement on your first-time penalties might seem simple, the process can be more difficult and far more complex than it sounds—especially if you want that interest on your penalties removed as well. We can help you perform the calculations to determine the total penalties accumulated on your account, as well as how much of your accrued interest is based on those penalties. Then, we’ll help you work with the IRS to seek abatement for the full amount.

We understand that, sometimes, circumstances arise that can cause you to fall behind on your taxes. If this happens to you, you shouldn’t be penalized for something that was likely beyond your control. The experts at the IRS Advocates will work to find you the relief you need. We can help you apply for an IRS repayment plan, guide you through that plan, and then help you seek penalty abatement when you’ve completed your payments. Give us a call today. We’ll sit down with you to learn more about your individual tax situation and help you find a program to bring you the financial relief you deserve.