Do You Qualify for IRS Penalty Forgiveness?

Without full payment of the fine and taxes owed, the IRS continues to charge penalties and interest each month, resulting in a substantial tax bill. However, you can reduce or eliminate this tax burden by requesting penalty forgiveness or abatement.

Eligible penalties

The most common penalties eligible for abatement are those applied for failure to file a tax return by April 15, failure to pay the total amount by the due date, failure to deposit estimated tax payments and insufficient check funds. Additional penalties may be added on a case-by-case basis.

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Types of IRS penalty forgiveness

First time penalty abatement

If this is your first penalty for failure to comply with due dates, you may be eligible for forgiveness through the First Time Penalty Abatement policy. You must meet the following criteria for this waiver:

  • You were not required to file or have no other tax penalties from the previous three years.
  • You’ve filed your completed return or an extension.
  • You’ve paid the amount due or made an installment agreement.

If you plan to request relief through the First Time Penalty Abatement Policy for a failure-to-pay penalty, the IRS recommends that you wait until you’ve paid the full amount due, because the penalty accrues while you have an outstanding balance.

Reasonable cause

Your tax penalty may be forgiven if you were unable to comply due to unforeseeable circumstances or barriers outside of your control. Circumstances for reasonable cause may include a natural disaster, serious illness or loss of access to documents. You can’t request reasonable cause forgiveness due to financial troubles, but the underlying causes may be considered. The IRS requires you to establish proof of reasonable cause through factual accounts and documentation of events.

Statutory exception

Any penalty you receive because of incorrect information from the IRS is eligible for removal. The statutory exception applies if the IRS gave you false information in writing and therefore caused errors in your return or payment schedule. To receive this relief, you must file Form 843 and produce the incorrect written correspondence between you and the IRS.

You can appeal penalties, even if the IRS has initially ruled against granting you relief from your penalty. In most cases, you need to create a formal written protest and provide evidence supporting or clarifying your position. However, appeals must be supported carefully, and a professional eye always helps.

Get help with IRS penalty forgiveness

Find out if you’re eligible for penalty forgiveness. Contact us today online for a free IRS tax consultation or call us at 330-865-7400. We review the details of your case and provide you with personalized help. With our guidance, you may be able to eliminate 100 percent of your IRS tax penalty.