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Penalty Abatement

A taxpayer may qualify for penalty abatement if they made an effort to comply with the requirements of the IRS but did not meet their tax obligations due to circumstances beyond their control.

The IRS offers three types of penalty relief:

  • first time penalty abatement- if the following are true:

    • didn't previously need to file a return or didn't have any penalties for the previous 3 tax years prior to receiving a penalty​

    • all currently required returns are filed or extension was filed on time

    • any tax due has been paid or arranged to be paid

  • reasonable cause- based on all the facts and circumstances in the taxpayers situation such as death, fire, natural disaster, inability to obtain records, serious illness, etc. Documentation is required to prove the reasonable cause

  • statutory exemption- incorrect written advise was given by the IRS but documents to support this need to be presented

  • other administrative waivers- incorrect verbal advice was given by the IRS

Remember, penalty abatement must be based on the above reliefs and not because you forgot or you did not have the money to pay.

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