Tax News

How To Get a Waiver or Penalty Abatement - 2013-10-27
Every single year the IRS issues several million penalties on taxpayers. What a lot of taxpayers aren’t aware of is that the IRS will abate a lot of those same penalties after assessment. In 2012, for example, the IRS issued almost 40 million penalties, but they later abated about 10% of those penalties. The majority of the abatements happened due to the fact that taxpayers contested those penalties. It is critical for taxpayers who deal with IRS penalties to be aware of their rights in order to argue against a penalty that the IRS issues against them.

There are all kinds of penalties that can be assessed against taxpayers, and you can read about them all in the handbook of IRS penalties. Most of these penalties fall into one of two major categories, and they are penalties related to accuracy and collection.

What are the most frequent kinds of penalties related to collection?

•    Overdue filing up to 1/4th of the taxes that weren’t paid on the return
•    Overdue paying of up to 1/4th of the taxes that weren’t paid
•    Overdue tax deposits, that are federal, that go a little over 10% of the deposits that were late

What are the most typical kinds of accuracy-related penalties?

•    For up to 1/5th of the taxes that are understated, you can get a negligence penalty
•    For up to 1/5th of the taxes that are understated, you can get a substantial understatement penalty

There are also a number of reasons why the IRS would reduce those penalties too. In consideration of abatement of the penalties, the IRS will apply a “reasonable cause”. The majority of people don’t know the IRS consider a long list of reasons for reducing a penalty, and described below is a sampling of the list:

•    Unaware of the law
•    Some minor detail was off or a clerical error was made
•    Inability to acquire records
•    Natural disaster, casualty, fire, or additional disturbance
•    Unavoidable absence, serious illness, or death
•    Natural disaster area
•    IRS clerical error

Taxpayers who were not required to file a delinquency previously may be subject to the initial First Time Abatement Rule by the IRS, with a request from the taxpayer being required. If the taxpayer hasn’t needed to send in a return previously, or if there were no previous penalties (outside of the penalty for estimated taxes), then he may be able to get this First Time Abatement Rule applied. The First-Time Abate is an Administrative Waiver. A person who wants to receive this waiver must send in a written penalty reduction request.

It is crucial that the taxpayer trying to get a reduction in penalties looks at the relevant area of the IRS Penalty Handbook. IRS employees looking at penalties make use of a software program that’s called the reasonable cause assistant. Basically, the IRS employs A.I. to discover whether to lessen a penalty or not. Those who pointedly make a reference to a portion of the handbook have a much better chance of getting their penalties reduced.

You have much better chances of getting penalties waived if you hire us to help. If our efforts unsuccessful we refund all or most of the fees.  To start call Nicholas A. Trishin, CPA directly at 404-585-1040.


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