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Request for Penalty Abatement


Tax penalties and interest are assessed by the IRS when you file late or owe taxes. The total liability is often heavy in penalties and interest. Interest and penalties may be reduced or eliminated if necessary. For taxpayers who have a legitimate reason for filing a late tax return, or who are unable to pay their tax contracts, a Request for Penalty Abatement can be filed.

We can prepare and file with the IRS a Request for Penalty Abatement Based Upon Reasonable Cause that presents the circumstances and facts that led to the late-filing or unpaid tax liability. IRS considers the circumstances and facts specific to each case in assessing a Request for Penalty Abatement.

If you owe taxes to the IRS, you probably also owe interest and penalties. It is possible for the IRS to penalize taxpayers for failing to file their taxes or failing to pay. Your tax debt can be compounded with these penalties and you may owe more taxes as a result. Luckily for qualifying taxpayers, the IRS permits first-time abatements. A lot of taxpayers are unaware of the first-time abatement (FTA) penalty waiver or how it can lower their tax debt.

Up until recently, the IRS assessed penalties for filing, paying, and depositing failures for about 70% of all penalties. Due to the automated assessment of these penalties, they accumulate until the tax liability is resolved regardless of the taxpayer’s circumstances. When you receive IRS penalties, you must comply with a few requirements in order to be eligible for the FTA waiver.

How to Qualify for A IRS Penalty Abatement

Providing that you have filed your taxes on time and made your IRS tax payments on time, you are eligible to qualify. If you are in compliance, all required returns must have been filed or an extension applied for, and any requests from the IRS must be closed. In other words, if the IRS is waiting for you to file your tax return for a particular year, you have to file it before you can request a penalty abatement. Taxes that are due must be paid or arranged to be paid before you are in compliance. If your payments are current, you can have an open installment agreement and request a penalty abatement. You must also have no history of penalties to qualify. As a result, if you had penalties in the preceding three tax years, you are not eligible for a penalty abatement.

How to Request an IRS Penalty Abatement

There are typically two methods for requesting penalty relief:

  • An IRS penalty can be abated by filing a penalty abatement. The IRS can abate penalties, or you can use a tax professional or write a penalty abatement letter.
  • Form 843 “Claim for Refund and Request for Abatement” can be used after the taxpayer has paid the penalty. The claim must be filed within three years from the due date of the return, or within two years from the date the penalty was paid.

A penalty abatement may require you to submit documents. The death certificate of anyone who you are claiming prevented you from filing on time must be provided if they are claiming their death prevented them from doing so. A medical record or insurance claim in connection with theft, fire, or a natural disaster can also be considered documentation. Send copies of the documents to the IRS and not the originals. It is best to contact your nearest IRS office and ask for a meeting if you want to verbally request a penalty relief. You cannot use the same reason for abating penalties again if the IRS denies your abatement request.

IRS Trouble Solvers Seattle can help you figure out if you’re eligible for a penalty reduction or a waiver. Not only can our tax attorneys help you file a penalty abatement waiver, they can also assist you with reaching a satisfactory resolution with the IRS. Give us a call today at (206) 970-4-IRS.

Case study: Taxpayer Gets Sober and Wants to Get Straight with IRSIn this case study, our taxpayer was a stay-at-home mother that went through a terrible divorce. As a result of her failed marriage and broken home, our taxpayer began abusing alcohol and drugs. As a result of her addictions, she was unable to find gainful employment. Because she previously relied upon her ex-husband to handle their finances and tax responsibilities, she was ill-equipped to handle these responsibilities including the filing of her tax returns and the payment of the associated liability. Unfortunately, our taxpayer’s drug and alcohol addiction deepened which, in turn, led to increasingly reckless behavior. She was arrested several times, incurred a number of speeding tickets and ultimately lost her driver’s license. As her drug and alcohol addiction continued to spiral out of control, she was unable to provide the requisite care and supervision for her children. Fortunately, our taxpayer began seeking treatment for her alcohol and drug dependency through a support group with her church and also by attending Alcoholics Anonymous. Although our taxpayer has been sober for some time, there were a number of legal issues that she still faced as a result of her poor judgment and decisions while she was abusing alcohol and drugs, including her IRS matters. With the assistance of the IRS Trouble Solvers™, the taxpayer prepared and filed her unfiled tax returns with the IRS. Because our taxpayer was not eligible for an Offer in Compromise, we negotiated an installment agreement with the IRS on her behalf. However, the unpaid liability was still substantial because the IRS assessed penalties and interest on the penalties against our taxpayer. The IRS Trouble Solvers™ filed a Request for Penalty Abatement Based Upon Reasonable Cause with the IRS seeking the abatement of the penalties and the related interest. Fortunately, the IRS agreed that the penalties and related interest assessed against our taxpayer should be abated. The taxpayer is now addressing the remainder of her unpaid tax liability with the IRS under her installment agreement free of the penalties and related interest that the IRS previously assessed against her.

Case study: Depression and Family Responsibility Put Ahead of Filing Tax ReturnsIn this case study, our taxpayer married his high school sweetheart and had a number of children with her. Unfortunately, the taxpayer’s wife began an affair unbeknownst to our taxpayer. Sadly, the marriage could not be saved and divorce proceedings were soon begun. As a result of the stress of learning that his wife cheated on him and because of the divorce proceedings, our taxpayer sank into depression. While dealing with his own depression, our taxpayer was also forced to serve as his mother’s primary caregiver because her health began to decline. Being from the old country, the taxpayer’s mother spoke virtually no English and, as a result, was nearly dependent on her son for virtually everything. Sadly, the emotional toll upon our taxpayer also affected his health. As a result of these terrible adversities our taxpayer stopped filing his tax returns and paying the liability due to the IRS. Our taxpayer retained the IRS Trouble Solvers™ who assisted him with the preparation and filing of the unfiled tax returns. As expected, the IRS assessed substantial penalties and interest on the penalties against our taxpayer. We filed a Request for Penalty Abatement Based Upon Reasonable Cause for our taxpayer explaining why our taxpayer did not file his tax returns on time or pay the associated liability in full. We assisted the taxpayer with making a substantial down payment to the IRS towards his unpaid liability and negotiated an installment agreement with the IRS for the remaining balance due. Fortunately, the IRS agreed that it should abate the penalties and related interest assessed against our taxpayer. In a short period of time, the taxpayer paid his liability in full under the installment agreement, did not have to pay the associated penalties and related interest and now enjoys a life free from any IRS problems.

Case study: Gambling Addiction Causes Marital Strife and DebtOur taxpayer and his wife began to gamble casually at the local riverboat casinos by playing roulette and slot machines. Because they enjoyed these new outings, they would go to the casinos approximately every other week. First, gambling was purely recreational and seemed to be innocent fun. Sometimes they would win and sometimes they would lose. However, either way, the impact on their finances was minimal. Unfortunately, our taxpayer won a number of large jackpots and the thrill of winning began to take hold. However, the winning did not last and our taxpayer discovered that he was losing approximately $1,000.00 per week at the casinos. Our taxpayer began letting their bills go unpaid so that they could have the money to continue gambling. Sadly, during this time our taxpayer’s marriage began to break down and they ultimately divorced. Our taxpayer found that the excitement of gambling was a needed diversion from his marital problems. As a result, he began to spend more and more of his free time and almost all of his money at the casinos. Our taxpayer found that the emotional rush he experienced from gambling was too much to overcome and, at times, spent an entire 24 hour period gambling, stopping to neither eat nor sleep. Although our taxpayer realized that his gambling addiction was beyond his control, the depression he experienced from his failed marriage and dire financial position rendered him incapable of doing anything about it. All he could think about was going to the casinos because, while there, he could forget about all of the problems in his life. As a result of his gambling, our taxpayer ruined his credit rating, was unable to pay his bills on time and nearly lost his job. He also lost contact with most of his friends because he spent all of his time at the casinos. As a result of his gambling addiction, our taxpayer stopped filing his tax returns and did not pay any of the associated liability. Of course, the IRS contacted our taxpayer who then hired the IRS Trouble Solvers™. We assisted our taxpayer with filing the unfiled tax returns and negotiated an installment agreement on his behalf. As expected, the IRS assessed penalties and related interest against our taxpayer in a substantial amount. We filed a Request for Penalty Abatement Based Upon Reasonable Cause on behalf of our taxpayer based upon his gambling addiction and depression stemming from his divorce. Fortunately, the IRS agreed with our position and abated the penalties and related interest assessed against our taxpayer. The taxpayer paid the liability in full under an installment agreement, did not pay the penalties and related interest and now enjoys his life free from any IRS problems.

The tax lawyers at the IRS Trouble Solvers™ Seattle have successfully obtained relief from penalties and related interest for its clients in many cases since its inception in 1991. The abatement of penalties and interest can total many thousands of dollars. Some examples where penalty relief may be appropriate include a death in the family, serious illness, gambling, alcohol or drug addiction, fires, floods or theft.

If the IRS has assessed penalties against you, call the IRS Trouble Solvers™ Seattle. Your BEST bet to resolve your IRS Debt!®

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