The way the IRS assesses penalties is sometimes complicated, but the most common ones taxpayers are hit with involve failing to file a return, or failing to pay all taxes owed once a return is filed. If you miss a tax deadline—or don't file at all in one or more tax years—the penalties will begin to add up.
The IRS charges a range of flat and percentage-based penalties that are based on the tax code for the filing year. So that means the penalty you pay one year for a late return may be less than what you pay under a different tax code in a different tax year. What's most important to remember however, is that penalties and interest will continue to compound each month that you are late filing or delinquent in paying. This can result in your tax debt ballooning well beyond the original amount you owed.
Penalty abatement allows the IRS to remove or lessen your tax penalty under certain conditions. Abatements may be approved due to a statutory exception, an administrative waiver, a correction -in – service error, or another form of reasonable cause. The following circumstances could potentially qualify for abatement consideration.
- A catastrophic event destroys required records or prevents you from mailing the return on time (fire, severe weather, flooding, natural disaster, etc.)
- You have a severe illness or a significant family emergency at the time the return is due
- Your return was submitted on time but improperly handled, routed, or date-stamped by the IRS
- Your envelope was postmarked on time, but inadequate postage or a wrong address delayed delivery
Abatement requests can be submitted using IRS Form 843, and many taxpayers do find success, especially if they can documentat of the circumstances on which their request is based.
The J. Gannon Helstowski Law Firm can help you apply for a penalty abatement from the IRS.