Instant IRS Penalty Reduction-Must Know!

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The IRS assesses taxpayers over $40 million in penalties each year. The most common penalties are for late payment, filing, or tax return errors, but there are many more.

Having penalties piled on top of debt the taxpayer already owes can cause the amount due to quickly spiral out of control. Seeing thousands of dollars in penalties can be overwhelming.

Often, taxpayers don't know that their penalties could be reduced or removed.

What is the process for penalty reduction? Is it as easy as simply asking IRS to reduce your penalty?

Yes. In many cases, the taxpayer can reduce their overall tax debt by asking IRS to reduce or remove their penalties.

Here are two things to know about successful IRS penalty removal and reduction.

1. There are rules that must be followed for a successful outcome.

The Must Know Points About IRS's Instant Penalty Relief:

You may qualify for the IRS's penalty relief, called First Time Penalty Abatement. It requires that you (mostly) have followed the rules about filing and paying your tax.

But you also want to be certain the relief helps you. Even better, you want to maximize the relief available to you.

*In the past, you must have filed the same type of tax return for the three tax years before the tax year you received the penalty. For any of those three years, you didn't receive any other penalties, or no penalty was removed for another reasonable cause.

*You filed all your required returns, or your currently due return is still under a valid extension.

*You can request this penalty relief even if you have not fully paid the tax. However, the Failure to Pay Penalty will continue to increase until you pay the tax in full.

*Only certain IRS Collection Representatives are authorized to grant the relief, and some are limited in their relief authorization amount.

*The relief doesn't help you for certain years, even if there were substantial penalties. (The rules here are far too technical to cover in this article.)

NOTE: The IRS is now treating this "First-Time" relief as a "Once-in-a-Lifetime" relief. This means that (generally) you cannot have this relief for two different years. Ever! Even if later, one year has more penalty than the year previously relieved.

And this leads to our next point, and a story:

2. You still need a Tax Attorney for the best result.

As we said, there are specific rules regarding penalty removal. You do not want to have someone untrained try to do this for you.

Here is a real-life example of why it is important to have the right help.

Tax Law Offices had a client who owed approximately $16,000 in penalties. We should have been able to remove at least half of those penalties for the client. Unfortunately, in 2016, the client had someone who did not have the correct training try to reduce their penalties.

That person was only able to get a penalty reduction of $15. Only $15 because they did not know the rules. Even worse, this attempted penalty reduction in 2016 restricted our ability to try again! (At least for now.)

This situation is a perfect example of why it is essential to get the right help when dealing with taxes or tax law.

Remember: A request to remove IRS penalties is a serious legal argument. This should only be done by a qualified tax attorney.

You may need professional help. If you know you've been penalized unfairly, contact Tax Law Offices. We will come up with a plan to get those penalties removed!

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