One of the IRS’s methods of punishing wayward taxpayers is to add penalties and interest to back taxes, failure to file cases or returns that have been filed late, and even if you fail to file the right tax return. Both penalties and interest charges are added automatically. Given these issues, many people have IRS Problems. If this is the case for you, investigating the possibility of removing both penalties and interest charges on the taxes you owe is worthwhile.
There are five types of penalties the IRS uses: Accuracy, Fraud, Failure to File, Failure to Pay, and combinations of these penalties.
One way to remove penalties from your tax bill is to show reasonable cause. Reasonable cause can be identified in many ways. Common events the IRS will consider are:
Ignorance of the law
Incorrect advice from the IRS
Incorrect advice from your tax professional
A mistake was made
The inability to obtain records
Serious illness or death
Acts of God
As long as your reason shows that you did not intentionally cheat, deceive, or mislead the IRS, it can qualify as reasonable cause.
You can request a penalty abatement in writing as soon as you receive your tax bill. IRS Form 843, Claim for Refund and Request for Abatement, is also available. Return the reasonable cause documentation along with a copy of your IRS Notice showing the penalty assessed. If you owe taxes and can pay them at this time, include your payment stating that this amount should go toward your tax portion of the bill. Do not forget to make copies of all your correspondence to the IRS.
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Be patient as it may take more than one mailing to receive a response to your request.
It is also important to note that if your request for penalty abatement is denied, you cannot use the same grounds to make another request.
Removing interest charges from your tax bill is not easy, and most times, it is not an option. If the reason interest has been charged is because of an IRS error you will have more success.
Other circumstances that may allow interest to be removed include:
If there were delays by the IRS.
If a tax or penalty is abated.
They may be decreased if you obtain an Offer in Compromise.
Filing for bankruptcy. This should be used as a last resort and it should be noted that you might still owe taxes after the bankruptcy term.
Contact our office for more information regarding IRS interest and penalties or any other IRS Problems you might be experiencing. Our knowledgeable staff will be able to help you resolve your IRS Problems so you and your family will be worry free.