Penalty Abatement of Tax Liability
Eliminate penalties with penalty abatement
If you are able to get abatement, you can eliminate a portion or all penalties accrued. Penalties are known to comprise up to twenty-five percent of the owed total tax amount. However, it will not eliminate the primary tax amount that produced the interest and penalties. All or a large majority of penalties will be eliminated, however not your interest. A major financial burden can be lifted from you if you are able to get some or all penalties abated.
When to apply for penalty abatement
Individuals try to quality for penalty abatement when they know they have the ability to pay the amount of tax owed, but believe that they should not be liable for any penalties they have incurred. If your request for abatement is accepted, you are then expected to pay the remainder of your tax liability in full. There are many reasons why the IRS will accept your abatement request. Below are a few reasons the IRS will accept, but not all. If you would like to know more for who can qualify for abatement, speak with a tax professional.
1. If you can prove a current family problem, for example, a divorce
2. Destruction or theft of your personal records
3. If you are presently dealing with a major illness
4. Major disruption in your life, like incarceration
5. Harmful advice given by a tax expert that was followed
6. A natural disaster or a disaster that you had no control over
7. Unemployed for a lengthy period of time
8. Death of an immediate family member
Most likely, if there was a factor that was not in your control and it influenced your ability to pay off any owed tax debts, you may be eligible for abatement. However, remember that if you abate your penalties, you will be required to pay the remainder in full. If you are unable to pay the remainder in one lump sum after the abatement, this is probably not the best choice for you.
How to file for penalty abatement
It is actually a fairly easy task to file for penalty abatement. Currently the IRS provides three different ways you can file.
1. You can mail the IRS a written petition for abatement. In it, you provide a few paragraphs on why you need the abatement, and you then ask for a refund. Provide any documentation that can support your reason for abatement, such as unemployment records, death certificates, or hospital records.
2. If you do not want to write a letter to the IRS, you can request to do an oral interview with an IRS employee. During this interview, you would state your reasons for wanting to qualify for abatement.
3. You can fill out the refund claim and ask for an abatement request form that is given by the IRS – IRS Form 843. All you then need to do is follow the directions to properly fill out the form
When filing for abatement, always provide detailed information that can make your case stronger on why you should be considered eligible for abatement. In this case, there is no such thing as providing the IRS with too much documentation. If you require assistance with your request for penalty abatement, please get in touch with us by filling out the form to the right.