Over the years we have catalogued circumstances where the IRS abated penalties based on good faith and reasonable cause. We have a clear idea of how to craft an abatement request. What follows is just a small list of when the IRS has abated penalties:
- You’re new to being a business owner and did not know you had to make quarterly estimated tax payments. The penalties are abated because the IRS takes into account ignorance of the law based on your rookie status.
- You suffer from severe depression and you file your return late. Depression is a recognized medical condition affecting how people feel, think, and behave. This illness can interfere with normal day-to-day activities, such as filing tax returns or paying bills on time. With the request for abatement, document your condition with a letter from a medical professional.
- You rely on the advice of a CPA to make a deduction that is later disallowed by the IRS. A so-called accuracy penalty is imposed. Your request for abatement is based on detrimental reliance of a professional.
- Surgery prevents you from filing your return on time, and you are assessed a late filing penalty. Explain your medical condition to the IRS, include documentation.
- Serious financial issues due to job loss prevent you from paying on time. This may constitute good faith and reasonable cause.
- A fire or flood destroys documents needed to prepare your tax return. Again, document your loss.
- Your father got sick and you had to travel to another state to care for him. You did not file on time or pay the tax because of this unexpected event.
- You adopt a son. His last name was changed to your last name. You claim your son as a deduction, but the IRS disallows it and sends you a deficiency notice with penalty and interest. This is cause for elimination of penalties and interest.
Call us for a free penalty elimination analysis. And many also benefit from our free book, How to Get Tax Forgiveness.