McCauley Law Offices, P.C. can help you if you are dealing with large penalty amounts and interest fees being applied to your back taxes. Hopefully, the fact that the IRS charges penalties and interest fees on the debt that you owe does not come as a surprise to you. You may feel as if you are underwater, swimming against a strong current when thinking of your debt to the IRS. We can help you. You may qualify for penalty relief, or penalty abatement services. If you do not get help with your IRS penalties, they will continue to accrue until you pay your balance in full.
Most Common Things the IRS charges penalties for:
- Failure to File – the date to file your taxes is April 15 unless you requested to file on an extended date and the request was approved by the IRS.
- Failure to Pay – when you do not pay the taxes reported on your return in full by April, 15. An extension to file does not mean that you have an extension to pay.
- Failure to Pay with Withholding Amt or Quarterly Payments – When you fail to pay the correct amount via withholding or through quarterly payments that you set up.
- Returned Check from Bank – when your bank does not honor your check or other form of payment
The penalties that the IRS can assess on your tax debts are calculated different depending on what they are penalizing. We cover common IRS penalty calculations separately in depth in other articles.
If you cannot pay your balance in full, you should pay what you can to the IRS as soon as possible. We can advise you of the proper channels for negotiating with the IRS including perhaps entering into an installment agreement to pay your remaining balance on taxes owed. You may also qualify for penalty relief or the IRS removing certain penalties. Our experienced tax attorneys can negotiate with the IRS on your behalf and potentially remove penalties owed.
Types of Penalty Relief the IRS Offers
The IRS will alleviate penalties in the case of reasonable cause. The IRS considers fire, casualty, natural disaster, or other disturbances as sound reasons for failing to file a tax return, make a deposit or pay tax when due. Other sound reasons are inability to obtain records, death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family. They will render reasonable cause for other occurrences if you can show that you used all ordinary business care and prudence to meet your tax obligations but were unable to do so.
The IRS does not consider a lack of funds as a reasonable cause for failure to file or pay on time. They will sometimes see the reason for the lack of funds as a reasonable cause that meets the criteria for the failure-to-pay penalty.
The IRS may provide relief from penalty under its administrative relief, First Time Penalty Abatement policy. You have to meet the policy’s requirements and we can help you determine if you are eligible under the requirements.
Some of the requirements under the policy are:
- You did not previously have to file a return or you have no penalties for the last 3 tax years prior to the tax year in which you have received a penalty.
- You filed all currently required returns or filed an extension of time to file
- You paid, or arranged to pay your full tax due
Understanding the First Time Penalty Abatement Policy is best when handled by a professional such as a tax attorney near you, helping you. For instance, you may want to wait until you can fully pay the taxes owed prior to requesting penalty relief under the services first time penalty abatement policy. You may also receive administrative relief if you have received incorrect oral advice from an IRS agent.
Penalty relief can be given if the IRS finds that you qualify for a statutory exception. These exceptions are for if you have received improper written information from the Internal Revenue Service.
The IRS does not abate interest charged for reasonable cause or as first-time relief. Interest is charged by law and will not cease until your account is fully paid.
At McCauley Law Offices, P.C., our lawyers will find a solution to your tax problems, no matter how complex your IRS issue is. View our services and contact us (or call 610-388-4474) to schedule a free consultation with one of our tax attorneys. View and purchase Gregory McCauley’s published work “TAXJAMS: Simple Solutions” on Amazon. From our office in Chester County, Pennsylvania, we find tax solutions for clients throughout the country.
