IRS Penalty Abatement Do’s And Don’ts

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If you failed to file your tax return or pay your taxes on time, you could face significant penalties. The IRS is more forgiving than you might think, however. If this is the first time you’ve filed or paid late, you may be eligible for penalty abatement. Keep these do’s and don’ts in mind as you proceed with the penalty abatement process:

Do: Take a Proactive Approach to Penalty Abatement

If you qualify for penalty abatement, consider filing a penalty non-assertion request. This could prevent the IRS from automatically instating a penalty. Your efforts now may minimize the later hassle of the abatement process.

Don’t: Assume You Can’t Qualify Based on Past Penalties

Not all past penalties will bar you from receiving the first-time penalty abatement (FTA) waiver. For example, estimated tax penalties hold no sway in determining your FTA eligibility. You might not qualify for penalty abatement if you’ve failed to file, pay, or deposit your taxes on time in the last three years — or if you’ve received a related penalty deemed ‘significant’ by the IRS.

Do: Complete Form 843 If You’ve Already Paid Your Penalty

If you qualify for abatement but have already paid up, you may be eligible for a refund. IRS Form 843 can be used to request both abatement and refunds of fees, penalties, or interest. This form must be filed within two years of the payment or three years of the initial due date or filing date.

Don’t: Expect an Easy Process

Unfortunately, you’ll probably face significant troubleshooting as you attempt to secure your abatement. The IRS has been known to incorrectly apply its FTA waiver rules. You may find it easier to secure your waiver if a tax expert advocates on your behalf. With persistence, it may even be possible to reverse an initial abatement denial.

Still struggling to make sense of the IRS penalty abatement program? The Highland Tax Group’s knowledgeable team can help. Call 720-398-6088 today to learn more.