In an effort to address the unprecedented burden of COVID and its financial fallout, the American Institute of Certified Public Accountants (AICPA) is advocating for the creation of a new tax penalty waiver. IRS Commissioner Charles Rettig may be skeptical of blanket penalty relief, but a few viable options are available for select individuals and businesses.
Many taxpayers remain completely unaware of the opportunity for penalty relief. We delve into this option — and the potential for expanded access — below:
Who Is Currently Eligible for the IRS Penalty Waiver?
At present, relief for federal tax penalties takes a few basic forms, each of which maintains its own unique eligibility standards:
- Reasonable cause. If extraordinary circumstances prevent you from filing or paying on time, you may be eligible for a waiver based on reasonable cause. Common qualifying scenarios include natural disasters, incapacitation, or death.
- First time penalty abatement. This program is available for taxpayers who have previously been in good standing with the IRS. Often referred to as administrative relief, this is a common alternative to reasonable cause waivers.
- Statutory exception. If you received incorrect advice from the IRS, you could qualify for a type of penalty relief known as a statutory exception.
Will New Forms of Penalty Relief Become Available?
While the IRS is not about to provide widespread penalty relief, greater opportunities may be available during the pandemic than were offered in the past. In addition to highlighting options such as first time penalty abatement, the IRS has eased up on paperwork and deadlines for installment agreements. Relief may also be available for taxpayers who struggle to continue meeting the terms of offers previously accepted by the IRS.
If you think you might be eligible for an IRS penalty waiver, don’t hesitate to seek help from the Highland Tax Group. Contact us today to learn how you can take advantage of this and other opportunities for gaining relief.