Sneak Preview – Website Updates Part V

IRS Tax Penalty Waiver

When you’re already having a difficult time paying your taxes, penalties and interest can make the matter much worse. When the IRS imposes tax penalties for failing to file, failing to pay, or for other reasons, it can cause the amount you owe to skyrocket—especially when additional interest is assessed on the penalties. Fortunately, there are situations in which you may be eligible to have your penalties reduced or eliminated through an IRS tax penalty waiver (also known as an abatement). The experts at Highland Tax Group can evaluate your situation, determine whether you might be eligible for penalty relief, and reach out to the IRS on your behalf to request and follow up on tax penalty abatements for which you may be eligible.

The Truth About IRS Tax Penalty Abatements

Be cautious of firms that promise in their TV or radio advertisements that they will get all your IRS tax penalties and interest waived. In reality, the IRS only offers penalty abatements for taxpayers who meet certain eligibility criteria—and only for certain types of penalties. The best any firm can do (including Highland Tax Group) is to help you determine whether you are eligible for abatement and help provide documentation to the IRS that proves your eligibility.

What Types of Penalties Can Be Abated?

The IRS typically offers penalty relief for eligible taxpayers for the following types of penalties:

  • Failing to pay taxes on time
  • Failing to file a tax return, or filing late
  • Failing to deposit certain taxes as they are due (e.g., estimated tax payments)

The IRS may also abate other types of penalties, but these are generally considered on a case-by-case basis.

What Types of Tax Penalty Relief are Available?

The IRS may waive or reduce penalties under three common types of relief:

  • First-Time Penalty Abatement—If this is your first time to miss paying or filing, you may be eligible for a first-time abatement provided you file all missing or required forms and pay your taxes owed (or make arrangements to pay them).
  • Reasonable Cause—The IRS may grant an abatement if you can demonstrate “reasonable cause” why you failed to file or pay taxes (for example, natural disaster, serious illness, inability to access your tax records, or simply being able to comply after using all “ordinary business care and prudence).
  • Statutory Exception—If the penalty was assessed because you received incorrect advice from the IRS—and if you can document it—you may receive a statutory exception abatement.

Can I Get Interest Waived?

The IRS is required by law to assess interest on all unpaid tax balances, so they will not waive or abate your interest. However, if the IRS grants a tax penalty waiver, they may also abate any interest accrued on that tax penalty.

If IRS tax penalties have made your tax burden overwhelming, let the Highland Tax Group work with you and with the IRS to obtain any penalty abatements for which you may be eligible.