• Failure to Pay (FTP) penalty. FTP arises from not paying the taxes owed when due. The penalty accrues at 0.5% per month of the tax balance due and maxes out once 25% is reached.
• Failure to File (FTF) penalty: FTF starts once the tax return has not been filed by the due date and accrues 5% per month on the balance due, maxes out once 25% is reached. This penalty accrues tens quicker than FTP. Even if you cannot pay the tax due, filing the return on time will avoid this penalty.
• Failure to make Estimated Tax Payment penalty: If you didn’t pay enough taxes during the year by withholding taxes from your paycheck or by making estimated tax payments, the IRS may assign you an estimated tax penalty equal to 0.5% balance due for each partial or full month you don’t pay the tax in full and maxes out at 25%.

On average, over 90% of the annual penalties issued by the IRS come from these three penalties. Fortunately, the Internal Revenue Service does provide a process for penalty reduction requests called penalty abatement. The IRS generally does not remove penalties without some formal request made by the taxpayer. As a result, many taxpayers could have gotten some form of penalty abatement but never applied for it and ended up unnecessarily paying them.

Depending upon the type of penalty and the surrounding situation will determine what courses of action are appropriate to apply for some form of penalty abatement. The IRS often will remove penalties if you have reasonable cause for incurring the penalties, if you are a first-time offender, or if your penalty resulted from taking incorrect advice from an IRS representative.

Penalty abatement only occurs after you persuade the IRS to do so. Many taxpayers are not aware of this. Therefore, understanding the rules surrounding penalty abatement eligibility and the application procedures is essential. Obtaining professional tax help from someone with extensive experience helping others with penalty abatement requests may be prudent. For this help, contact Harmon Tax Resolution, LLC for a free consultation today. In the interim, please read on for more information regarding penalty abatement and how to address IRS penalties.

What Is an IRS Penalty Abatement?

IRS penalty abatement occurs when the IRS concurs with your request to have penalties removed. Most IRS penalties assessed can be abated, provided specific criteria have been met. How to pursue abatement varies based on the penalty type and reason it incurred. IRS abatements are also called IRS penalty relief or IRS penalty waiver.

Which IRS Penalties Are Eligible for Abatement?

The IRS offers abatement opportunities for many of its penalties. Fortunately, this includes the most frequently IRS-issued penalty types previously listed, such as the Failure to File penalty and the Failure to Pay penalty. In addition, the Failure to Deposit (FTD) penalty, which occurs when employers don’t deposit their payroll taxes on time, is also included. The FTD penalty accrues faster: 2% of the unpaid deposit for payments 1 to 5 days late. 5% for tax payments that are 6-15 days late. 10% for deposits over 15 days late or made within ten days of receiving the first IRS notice requesting a tax payment.

For these three types of penalties, you can request penalty relief no matter how much the penalty is for. Your ability to request penalty relief is very limited for other tax evasion or fraud penalties. In addition, Trust Fund Recovery Penalties are not abatable; however, if you can establish that you are not a responsible party for this, you may be able to appeal it.

How Are IRS Penalty Amounts Determined?

IRS penalties are solely based on the amount of your tax liability. The penalty amount is computed by applying a particular penalty’s statutory percentage rate to the amount of the tax that you didn’t pay, report, or deposit. For example, if you late filed your tax return where you had a tax balance due of $1,000.00 on May 20^th of the same year, which was due on April 15^th, you would have a Failure to File penalty totaling 10% of the amount due totaling $100.00.

Does the IRS Apply Interest on Tax Penalties?

IRS charges interest on the amount of the tax balance owed, which includes penalties incurred. The IRS charges interest from the date the balance becomes due. A penalty occurrence will add to the balance due, and interest in that increase begins at the time of inclusion. In addition, the IRS compounds interest, meaning the additional interest will then be subject to having interest computed. Tax debts can get out of hand quickly if action is not taken, especially considering the recent interest rate increases. Under the Internal Revenue Code, the interest rate is determined every quarter. For individuals, the IRS interest rate is determined by the Federal short-term rate plus 3%.

However, if successfully abate a penalty, the IRS will also remove the interest affiliated with that penalty. Getting a penalty abated has added benefits. However, this type of interest removal does not ordinarily apply to other components of your tax debt unless there are changes in your tax assessments or errant interest calculations.

An IRS Tax Attorney-CPA-EA can assist in determining the specific documentation required to abate tax penalties entirely or partially.

What Is the IRS First-Time Penalty Abatement?

The IRS First-Time Penalty Abatement is where the IRS waives a specific penalty because it is the first time you have had such an infraction. In this instance, no explanation is required; you only must inform the IRS that this is your first penalty. If you meet some IRS compliance requirements, the IRS will abate the penalty under this position. The IRS classifies this type of abatement as an administrative penalty waiver.

What Are the IRS Compliance Reporting Requirements and Payment Obligations Needed for First-Time Penalty Abatement?

To be considered for IRS First Time Penalty Abatement, you must be compliant with IRS reporting and payment obligations, which are:

• TIMELY FILING FOR PRIOR 3 YEARS: For the last three years, you have timely filed the type of return the penalty stems from.
  • For example, if you seek penalty relief from a recently filed 2022 income tax return, you must have timely filed your 2019, 2020, and 2021 tax returns.
  • If this pertains to a payroll return, but you were not in business during the last three years before the return on which the abatement request is being made, if you have maintained timely filings for the available time leading up to this, you will be okay since you were not required to file during the time your business did not exist.
• NO PENALTIES INCURRED FOR THREE YEARS PRIOR. You did not incur any penalties for the three years before the year the penalty was incurred. There is an exception to this rule: if you had a different type of penalty removed, you would still be eligible.

• CURRENT ON ALL TAX FILINGS. You have made all required current tax return filings or are currently on an extension to file.
  • For example, suppose you are seeking a First Time Abatement relief from a penalty relating to a 2020 tax return. In that case, you must make sure that the current year’s tax return has been timely filed or, if not filed yet, you have filed for an extension, and the extension time has not expired.
• PAID PRIOR TAXES DUE OR ARE CURRENT ON IRS PAYMENT PLAN. If you have a prior tax balance owed, you may still obtain a penalty abatement if you either pay the taxes due or have made a payment arrangement with the IRS.

You may be able to obtain an IRS abatement while still owing the underlying tax; however, it may be prudent to pay the balance owed to avoid having additional penalties tacked on.

How Do You Request IRS First-Time Penalty Abatement Relief?

There are several ways you can request IRS First-Time Penalty Abatement Relief:

• Call the number listed on your IRS notice. State you are seeking First-Time Penalty Abatement Relief
• Complete and submit IRS form 843 – Claim for Refund and Request for First-Time Abatement. You must list the tax period, type of return, and type of tax. You will also provide information about the penalties you are requesting abatement towards. You can note you are requesting an abatement because this was the first time you incurred these penalties.

IRS Penalty Relief Based on Reasonable Cause

The IRS only grants penalty relief under Reasonable Cause when you have established that you had had a plausible reason for either late paying the tax or late filing the tax return. Typically, the IRS may consider granting relief if it could be shown that the delay of late filing or late payment resulted from events impacting you which were beyond your control, all the while you used prudence and ordinary care to address either the filing or paying your taxes. Negligence or recklessness are not valid reasons for this type of relief.

Reasonable Cause tax abatement can be applied for:

• Late Filing Penalties
• Late Payment Penalties
• Late Deposit Penalties
• Accuracy-related Penalties – in some cases

Below is a non-inclusive list of some potentially plausible reasons the IRS may accept for penalty abatement under the basis of Reasonable Cause:

• You could not pay or file timely because of an act of nature such as wildfires, earthquakes, floods, hurricanes, tornados, or federally declared disasters. There could be other reasons that fall in line with this.
• You were prevented from acquiring the necessary records for proper tax return preparation for reasons beyond your control.
• You could not make timely deposits, or processing failed due to systems being down.
• You were impeded from being unable to timely file tax returns, pay taxes, or make deposits due death of an immediate family member, or you or your family were impaired due to a severe illness.
• You encounter other legitimate reasons that were out of your control, resulting in you missing timely tax filing or paying taxes owed.

To correctly complete your Reasonable Cause request, you must write your reasoning precisely and concisely on the application. Obtaining tax professional help may be prudent.

Typically, the IRS will not approve a Reasonable Cause request due to one of these situations:

• Since you are ultimately responsible for your tax filings and payments, missing filings or payments due to tax preparers will not be accepted.
• Misinterpreting tax laws is not a valid reason for lack of payment or late filing.
• You made a mistake. You may be able to use this reason if you can establish that you tried to comply with the tax law, but in general, you’re expected to review your return for mistakes.
• You could not afford to pay the taxes due. While this may not be valid for Reasonable Cause, you may be eligible for other IRS debt resolutions, such as Payment Plans, Currently Not Collectible status, or even Offer in Compromise.

It may be prudent to discuss your situation with a professional tax attorney-CPA who can help establish whether you have a good reasonable cause to present to the IRS for penalty abatement consideration or whether another option should be considered.

How to Make an IRS Reasonable Cause Penalty Abatement Request

You request by filing Form 843 – Claim for Refund and Request for Abatement. Make sure to check the appropriate listing under section 5a on the form. Section 7 provides a space to list the facts and surrounding circumstances. You can attach additional sheets if more space is needed for your narrative and provide other supporting documentation. For narrative purposes, concisely and briefly describe all pertinent information to support your reasonable cause position. The IRS representative needs to understand your position well and clearly. Establishing Reasonable Cause is an area a tax attorney-CPA could provide proper guidance on.

Here are some of the factors the IRS considers to establish whether reasonable exists:

• When and what occurred.
• What facts and circumstances prevented you from paying the tax or filing the return on time.
• How the circumstances influenced your ability to pay or file your tax return.
• What was your response to the situation, along with how long it took you to respond once you became aware of it.
• When dealing with a corporation, trust, or estate, the IRS also looks to establish who had the authority to make the tax deposits or carry out the tax return.

It’s imperative to provide as much 3^rd party documentary evidence as possible to establish proof of your Reasonable Cause contention. Here are some examples of 3^rd party documentary evidence:

• Hospital Records
• Police Records
• Court Records
• National Disaster Documentation
• Physician documentation of the illness, how it impacted you, and the timeframe.
• Death Certificate
• Insurance records

Whether you are faxing or mailing in your Form 843 application, be sure to include any documentary evidence with it.

Must I Use IRS Form 843 to Apply for Either Reasonable Cause or First Time Penalty Abatement Requests?

You can write an abatement request letter instead of filing form 843. Sometimes, a letter may be easier to frame your position than using a form. If you elect to use a letter, be sure to include the following:

• Your name, as listed on the tax return, and tax Identification number.
• The tax form is associated with the penalty and applicable tax period.
• The IRS Notice Number and date if you’ve received a notice.
• What relief type you are seeking (Reasonable Cause or First-Time Penalty Abatement).

This information must be put near the top of the letter immediately, followed by listing your penalty abatement requests sought. You have supporting information listed for each request. Although not required, it’s even helpful if you list the applicable IRS Tax Code or Statute relevant to each relief compliance requirement. Finally, be sure to sign your name on the request letter.

Hiring a tax attorney-CPA may help ensure you have included the correct details and proper support for your request.

How Do You Address Penalties Incurred Due to Incorrect IRS Direction?

Even though this occurs infrequently, you are still entitled to IRS penalty relief through what is known as Statutory Exceptions. A Statutory Exception can be sought when the IRS provides the taxpayer with some written advice to follow, which results in a penalty to incur. To be successful with this type of request, you must adequately document the incorrect advice and show how this caused the consequences. An example would be if an IRS representative instructed you to file a return later than it was due, which caused you to incur a late filing penalty.

To resolve this situation, you can go directly to the IRS and provide them with a trail of the IRS communications which caused you to act incorrectly. You can use Form 843 or draft a letter. You must make sure to:

• Provide proof that you sought advice from the IRS.
• Submit a copy of the actual written errant advice by the IRS.
• Provide support showing how the tax adjustments/directives caused the penalties or increases in tax.

Anytime you have correspondence with the IRS, record and save it for future use, if needed.

Get Trusted Professional Tax Help with IRS Penalty Abatement – Make the Call

To ensure you get the best possible IRS penalty relief outcome, have an experienced tax attorney-CPA expert make it happen. Call today (772-418-0949), or complete an online inquiry form for a free consultation with experienced IRS Penalty Abatement Tax Attorney-CPA-EA, Will Harmon of Harmon Tax Resolution, LLC. He will handle your IRS Penalty issue so you can return to doing what matters most.

For additional information, please see the following blog articles:

• “ What is an IRS Penalty Abatement?”
• “What Are IRS Tax Resolution Services?“
• “When Should You Hire a Tax Lawyer?“

Make the Call Today So That You Steer Your Path Tomorrow!

Make the Call Today So That You Steer Your Path Tomorrow!

Incurring IRS penalties can be very costly; it’s worse than just having an added tax placed against your tax balance because your tax balance can continue to grow substantially with penalties. As time passes, additional penalties and interest will pile up, making resolving it even more challenging. The IRS recognizes this and is willing to abate some penalties.

Very rarely does the IRS automatically decide to remove penalties like they recently had by removing late filing penalties for 2019 & 2020 tax filers due to Covid 19 impacts. Ordinarily, you must formally request some form of penalty abatement from the IRS. There are various circumstances in which the IRS will consider penalty removal, such as if the penalty was assessed based on incorrect advice provided by the IRS, if there is a reasonable cause for incurring the penalty, or if you are a first-time offender.

Since you must convince the IRS to abate the penalties, a good understanding of the tax laws will help tremendously. A tax professional can significantly help you through the process. At Harmon Tax Resolution, LLC, tax attorney-CPA-IRS EA Will Harmon can help you apply for Reasonable Cause or other types of IRS penalty abatement relief. Contact him today for a free consultation on how he could assist you with penalty abatement relief. Please read on for more information about penalty abatement relief.

What Is IRS Penalty Abatement?

IRS Penalty Abatement, also known as IRS Penalty Relief or IRS Penalty Waiver, occurs when the IRS approves a request to remove IRS tax penalties from your account. Most of the income tax penalties assessed by the IRS are eligible for abatement consideration. The type of penalty and its respective cause of occurrence will determine which abatement procedure is required by IRS.

Which IRS Penalties Qualify for Abatement?

There are over 150 IRS penalties for late filing, payment, return errors, and other non-compliant activity. However, you can request an abatement for the following:

• Failure to File Penalty occurs if you don’t file your tax return or file your tax return late. The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a late tax return. The penalty won’t exceed 25% of your unpaid taxes. Failure to File Penalty amount also accrues at the annual interest rate the IRS sets. To avoid this penalty altogether, it’s recommended to timely file your tax return, even if you cannot pay the tax due by the due date.
• Failure to Pay Penalty — This penalty comes into play when you file a tax return but don’t pay it. Typically, underpayment penalties are 5% of the underpaid amount and capped at 25%. Underpaid taxes also accrue interest at a rate the IRS sets annually.
• Failure to Deposit Penalty — If the business fails to make its deposits as scheduled, in the correct amount, or in the manner required, the IRS will charge a federal tax deposit penalty. For amounts not properly or timely deposited, the penalty rates are: 2% — deposits made 1 to 5 days late, 5% — deposits made 6 to 15 days late, 10% — deposits made 16 days or more late, but on or before the 10th day after the date of the first notice we sent you asking for the tax you owe.

You can seek relief regardless of the amount for these three types of penalties. However, for a trust fund recovery penalty, you may only seek relief through an appeal by establishing that you should not have incurred it. If you have penalties related to tax fraud or tax evasion, you will generally be unable to request abatement for either.

These IRS tax penalties are not assigned a fixed dollar amount. It is the total amount of the tax liability that determines this. The tax penalties are a percentage of the tax you didn’t report, pay, or deposit. The amount of the penalty relief you maybe seek could vary significantly depending on the underlying tax obligation amount.

Abatement Request Are Not for All IRS Tax Penalty Types

Many other IRS penalties generally require different procedures to request relief. For example, if you were to receive the estimated tax penalty, ordinarily, you would have to request an exclusion from the penalty when filing your tax return (individuals use Form 2210) rather than just seeking an abatement.

Other penalties are proposed during IRS audits and investigations. These include fraud or accuracy penalties and typically require you to deal with IRS appeals officers or auditors before the penalty assessment. For return accuracy penalties, you can still request abatement after penalty assessment; however, doing so may require taking the IRS to court or using some particular IRS procedure. Seeking the assistance of an experienced tax attorney will ensure a proper relief approach is taken. For a free consultation with a multi-licensed tax attorney-CPA-IRS EA, please inquire.

How Interest on Tax Penalties Work

Regardless of the type of IRS debt, whether from a tax balance owed or IRS penalties applied, the amount is subject to having interest applied once it becomes due. The interest rate applied is in line with the Federal interest rate and is adjusted quarterly to match any changes. In addition, the interest calculation is compounding; meaning interest accrues on the interest accumulation. If not addressed, the balance can increase quickly.

Can IRS Interest Be Abated?

Typically assigned interest associated with tax debt is not abatable unless the tax assessment has been done in error. However, if you successfully get some form of penalty abatement, any interest associated with that penalty will also be abated.

What Is the IRS First-Time Penalty Abatement?

The IRS First-Time Penalty Abatement is an administrative waiver that the IRS may grant to relieve you from penalties for Failure-to-File, Failure-to-Pay, and Failure-to-Deposit if specific criteria are met. In addition, no explanation is needed for why you late paid your tax balance or filed your tax return late. Firstly, you must communicate to IRS that this is your first penalty. Secondly, you must demonstrate that you meet the compliance requirements, which consist of reporting, and payment obligations.

Reporting compliance, if required for the last three years, you must demonstrate that you filed the type of return in which the penalty was assessed.

Let’s say you are applying for relief from a penalty for late filing of a payroll tax return due in 2022. For penalty abatement purposes, you must have timely filed your payroll tax returns for 2021, 2020 & 2019. Now consider if you were applying for a late filing penalty on your personal 2022 income tax return, but 2020 was the first time you were required to file. Because you were not required to file for three years, you will not have to meet the three-year compliance requirement. You would still have to show your 2020 tax return was timely filed, which would satisfy the compliance requirement.

Another element to show is that you have not incurred any penalties over the last three years before the year the penalty took place. However, you still meet this requirement if you incurred a penalty but had it removed for a different reason than First-Time Penalty Abatement. For example, if you used a statutory exception as a basis for removing a penalty, you may still be eligible to apply for the First Time Penalty Abatement.

Payment Obligations

You can apply for abatement relief if you still owe the tax related to the requested penalty. But not if an outstanding tax due is unrelated to the abatement penalty request. For example, if you are applying for relief for penalties related to a 2020 tax return while you also have an outstanding balance for 2019, you can’t get penalty relief until you pay the 2019 bill or set up a payment plan.

Suppose you chose not to pay the tax on which the penalty is being abatement. In that case, it’s essential to recognize you will begin incurring an additional late payment penalty of 0.5% every month toward the balance due. Paying the tax or setting up a payment plan may be your best option here. For example, you owe $20,000 in federal income tax when the penalty was abated, and you did not pay the tax. At this balance, a late payment penalty assessment would be $100 a month, which would add up quickly. It may be advantageous, in some circumstances, to pay the tax debt or setup up payment arrangements on the tax before seeking penalty abatement.

How to Request the IRS First-Time Penalty Abatement (FTA) Relief

You can request FTA by calling the IRS at the number on your notice. Alternatively, you can fill out and submit Form 843 (Claim for Refund and Request for First-Time Abatement). To fill out this form, you need basic information about your incurred penalties and the tax return associated with the penalties. This includes the type of return, type of tax, and the tax period.

There are several ways you can request an FTA:

• Fill out and submit Form 843 (Claim for Refund and Request for Abatement). If for FTA
• Call IRS – use the number listed on the notice

What Are the Requirements for IRS Penalty Abatement From Reasonable Cause?

To request Reasonable Cause (RC) consideration, you must have a legitimate reason for late filing the return or paying the tax. Typically, RC occurs when situations arise outside of one’s control, causing one to miss IRS filing or paying requirements. If negligence or recklessness occurred, causing the penalty situation, RC relief would not be available as a remedy. It would help if you established that you exercised ordinary business care and prudence and acted in good faith.

Late filing of tax returns, late payment of taxes due, or tax deposits are situations where you may be eligible for RC relief consideration, depending on surrounding facts and circumstances. Accuracy-related penalties, in some circumstances, may also fall under RC relief consideration. Listed below are situations where RC relief may be available (not an all-inclusive list):

• Natural Disasters – such as hurricanes, floods, tornados, earthquakes, insect infestations, wildfires, etc. cause you to file your returns or pay your taxes late.
• Infirmity, Death, or Absence of taxpayer, immediate family, or caretaker significantly prevented the ability to file a tax return, pay taxes due, and make timely deposits.
• Lack of Access to Records critical records needed for tax return completion are unavailable due to reasons outside your control.
• System issues that delayed a timely electronic filing or payment.
• Other Legitimate Reasons not listed above are out of your control, causing failure to timely file tax returns and pay taxes or deposits due.

To properly request RC abatement relief within the application, you must adequately prepare a written explanation of your reasoning. Having a dedicated IRS tax attorney could help tremendously with this process. For a free consultation on how multi-licensed tax attorney-CPA-IRS EA Will Harmon of Harmon Tax Resolution, LLC can help, please call or complete the inquiry request.

Not all situations will qualify under Reasonable Cause for IRS abatement relief. Listed below are situations in which the IRS disqualifies for this relief:

• The inability to Pay Tax is not a reasonable cause. However, there are other tax relief options to consider when you cannot pay, such as applying for Currently Not Collectible status or possibly a form of Offer-In-Compromise or a Partial Pay Installment Plan.
• Misunderstanding Tax Law is not a valid reason for filing your tax returns or paying taxes late.

• Late Filing or Late Payment by Your Tax Professional is not considered a reasonable cause because you as the taxpayer, are on the hook for filing tax returns and paying taxes on time.
• Mistakes – you are expected to catch errors on tax returns reasonably. However, there may be a plausible argument if you reasonably attempt to comply with the tax law.

It may be helpful to reach out to a tax attorney to review your situation and let you know if your reasons for relief have merit or not. Ultimately, the IRS decides, but having a tax attorney will help steer you in the right direction.

How to Apply for Reasonable Cause IRS Penalty Abatement

You must complete IRS Form 843 – Claim for Refund and Request for Abatement. Your request must be supported by accompanying facts and circumstances. It is imperative to present well-organized, clear documentary proof for the relevant facts presented and support for causal points being made. This is an area an IRS Tax Attorney-CPA may be able to help you.

The IRS looks at the following factors when determining if you have a valid case for a reasonable cause:

• When and what happened?
• The circumstances and facts inhibited you from filing your tax return and/or paying the due tax.
• How did your situation impair your ability to file your tax return and pay the tax due timely?
• What were the facts and circumstances surrounding the situation that inhibited you from timely filing your tax returns and/or making timely payments?
• How timely, and what was your remedy to the situation once you became aware?
• The IRS will also factor in who was responsible for executing the return or making a deposit or payment when dealing with tax returns involving potential other parties, such as corporate returns, trusts, or estates.

It is imperative to provide solid proof to support your position adequately. These are some of the documents to consider using:

• Medical Records – hospital – dental – rehab
• Physician letter detailing surrounding time frames (dates), types of illness, and ill effects.
• Court Records
• Law Enforcement Records
• Documentation of natural disasters, etc.
• Death Certificate
• Insurance claims to support damage.

If you request tax relief over the phone, you will be directed to fax or mail all of your pertinent documentation and written statements to the IRS; otherwise, plan to include these documents with your relief application.

How to Complete a First-Time Penalty Abatement or Reasonable Cause Letter

You can directly send a penalty relief request letter to the IRS. Be sure to include the following in your request letter:

• Your complete name as listed on the tax return/notice and tax ID number (SS, ITIN, EIN).
• The tax form (i.e..1040, 941, 1041) and tax period – this will be listed on the notice.
• The notice number and date if you’ve received a notice (top right-hand corner 1^st page).
• The relief type (First-Time Abatement or Reasonable Cause).

It’s best to list this information in the upper part of the letter. Directly below this, indicate the relief request and a corresponding explanation of how the relief criteria have been met. Please list the applicable IRS tax code or statute for each compliance requirement to strengthen your case and make it more concise. Finally, sign and date the document.

Enlisting the help of a tax attorney-CPA will ensure the completeness and accuracy of your IRS abatement letter or form request. For a free consultation on how tax attorney-CPA-IRS EA Will Harmon could provide

What is a Statutory Exception Used for Penalty Abatement

A statutory exception stems from when you act upon advice rendered by the IRS, which turns out to be incorrect, causing you to incur penalties. Although not a frequent occurrence, they do occasionally happen. You must provide proof of the IRS’s erroneous advice and the consequences. Anything less will most likely result in a denial of your request.

For example, let’s suppose you are working with an IRS agent, and they sent you a letter, fax, or email indicating an incorrect due date for a tax filing, and you relied on this advice and filed accordingly. As a result of this reliance, you were penalized.

Remedying this situation is straightforward as long as you send a copy of the errant message within your abatement request.

How to Complete Penalty Relief Due to Statutory Exception Request

Form 843 is generally used for filing requests, or you can call the phone number on the notice. For Statutory Exception Abatement Requests, be sure to complete the following steps:

• Submit a copy of the written advice request made to the IRS.
• Submit evidence of the IRS’s erroneous advice.
• List any tax adjustments that tie to the penalty and/or show any additional taxes incurred and any other evidence supporting your position.

Partner with a Tax Attorney-CPA-IRS EA Who Can Assist With Tax Penalty Abatement

If you believe you qualify for penalty abatement or need assistance with another tax matter, contact the tax attorney, CPA, IRS EA Will Harmon by calling 772-418-0949 or completing an online inquiry request. Call today and sleep well tonight.

Surprisingly not many taxpayers either know about the IRS’s penalty forgiveness under Penalty Abatement (“PA”) and First Time Abatement (“FTA”) or take advantage of them if their tax situation warrants it. The IRS introduced this penalty waiver over 20 years ago, yet it is often overlooked. Tax penalties can significantly increase the total balance owed, making it even more challenging to square your IRS tax debts.

What Penalties Can the Taxpayer Request Abatement? Although there are over 150 kinds of civil penalties in the U.S. Internal Revenue Code, ranging in severity, the most issued by the IRS are Failure to File, Failure to Pay, and Failure to Deposit penalties. These penalties may be eligible for abatement under an FTA provision.

Requirements for FTA Consideration

An FTA can be very beneficial; however, certain restrictions exist. There are several factors to address to qualify for a tax abatement:

• Filed Tax Returns: The taxpayer must have their tax returns filed for the last three years before the tax year they received the Penalty. There cannot be any request by the IRS for an unfiled return. Also, within this filing requirement are that any required extensions have been filed.
• For IRS tax debt, there needs to be a plan showing that the balance is being paid. This is typically done through an IRS payment agreement.
• First Time Abatement is precisely that – a one-time deal. You cannot request an FTA over multiple years.
• Didn’t receive any penalties during the prior three years, or any penalty was removed for an acceptable reason other than First Time Abate. Example: You request First Time Abate for a Failure to Pay Penalty on your 2021 tax return. You don’t have any unresolved penalties on tax returns for 2018, 2019, and 2020 and didn’t get First Time Abate relief.

How to Request the First-Time Abatement

When you make the request, you must adequately indicate what type of Penalty you seek to abate. If you are requesting this for your personal income tax return, you are eligible to apply for the following:

• Failure-to-File. The request is to abate a certain amount of fees and penalties related to a single tax period when you fail to file a return.
• Failure-to-Pay. In this case, you filed the return and had a balance due but did not pay it.

If you are requesting this for your business tax return, you are eligible to apply for the following:

• Business Failure-to-File. This request only is for a business that failed to file in a given year.
• Business Failure-to-Pay. This request is for a business that has not paid its taxes due, even if just a partial amount remains.

Submitting a Request

You can reach out to the IRS and make a request. Having an experienced, qualified tax practitioner to assist in filing the request could go a long way in getting you accepted. Not all requests are accepted on the first request and require appeals. Having someone who knows the IRS’s ins- and outs, along with a tax attorney-CPA-EA’s ability to properly advocate the position, could make the difference.

Experience Tax Practitioner attorney-CPAs can help determine whether you qualify, the best position to advocate for, along determining procedural processes to adhere to. In addition, if follow-ups are required, we know where and whom to seek results tenaciously. With an FTA, one can reapply if turned down on the first attempt.

It is still possible to request a refund for FTA even if you have already paid the Penalty and interest. The time limit to make the request is three years from the return or filing date or two years after the Penalty was paid.

Having penalties abated is a great way to lower the tax burden and should not be forsaken. The IRS does not automatically grant this relief, so having an experienced tax practitioner to help see this through could be highly beneficial. Call Harmon Tax Resolution, LLC today to see how Will Harmon, Esq, CPA., IRS EA, could help you with your tax abatement needs.

• The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.
• If both a Failure to File and a Failure to Pay Penalty is applied in the same month, the Failure to File Penalty is reduced by the amount of the Failure to Pay Penalty for that month, for a combined penalty of 5% for each month or part of a month that your return was late.
• If after 5 months you still haven’t paid, the Failure to File Penalty will max out, but the Failure to Pay Penalty continues until the tax is paid, up to its maximum of 25% of the unpaid tax as of the due date.
• If your return was over 60 days late, the minimum Failure to File Penalty is $435 (for tax returns required to be filed in 2020, 2021, and 2022) or 100% of the tax required to be shown on the return, whichever is less.

This is an avoidable expense. If you are ready to file or qualify for an extension, please do so today. If you have not gotten your tax return prepared, the sooner, the better.

For more information, please refer IRS website.