IRS Penalty Abatement

While the IRS will not abate interest on unpaid taxes, there are circumstances under which penalties can be abated.  These include: i) First Time Penalty Abatement and ii) Reasonable Cause Penalty Abatement.

First Time Penalty Abatement

Under the IRS rules regarding First Time Penalty Abatement, you may be able to get failure-to-pay and failure-to-file penalties removed for a single tax period if the following apply:

  1. You filed your tax returns and paid taxes when due for the three tax years prior to the year in which you seek to abate penalties;
  2. You have filed all required tax returns; and
  3.  You either don’t have any unpaid taxes or you are in resolution status with the IRS for unpaid taxes.

The First Time Penalty Abatement applies to personal income taxes, business taxes, and employment/payroll taxes. Typically, a request to abate penalties can be made over the telephone however in certain circumstances, a formal written request on the requisite IRS Form must be submitted.

Reasonable Cause Penalty Abatement

The IRS will consider any reason which establishes that the taxpayer used all ordinary business care and prudence to meet federal tax obligations but was nevertheless unable to do so. Acceptable reasons may include:

  • Fire, casualty, natural disaster, or similar disturbances
  • Death, serious illness, incapacity, or unavoidable
  • Inability to obtain records
  • Ignorance of the law
  • Mistake
  • Undue Hardship
  • Erroneous advice or reliance

The taxpayer must show: i) an inability to comply due to circumstances beyond his control and ii) that the failure to comply was not due to any willful neglect on the taxpayer’s part but rather the taxpayer made honest and reasonable attempts to comply.

IRS Penalty Abatement

The attorneys at Segal, Cohen & Landis have successfully removed tens of thousands of dollars in IRS penalties for our clients over the years.  We have firm knowledge of the IRS rules concerning penalty abatement as well as the processes for achieving it.   

Need Help with Living Abroad?

Please feel free to contact us regarding your IRS Penalty Abatement. Every tax matter is unique because every person’s situation is unique. We can quickly and efficiently analyze your circumstances and propose various options of resolution.

Call (800) 934-3578 for a free, no-obligation consultation with a tax attorney, or fill out the contact form at the bottom of this page.

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