When a tax debt is owed and the deadline to pay the amount in full has passed, the IRS begins to apply late payment penalties against the debt. This in turn increase the amount of debt owed, which can make it harder to pay if the taxpayer is already having trouble pay the original tax debt.

There are options available to help taxpayers manage their debt, such as penalty abatement; however, no all can qualify. If you have any concerns regarding your tax debt or if you could qualify for a penalty abatement, contact our tax attorney today.

What is Penalty Abatement?

A penalty abatement is an agreement between the IRS and a taxpayer to reduce the amount of penalties added to a debt. It could also reduce the amount of debt owed overall.

Not everyone can qualify for a penalty abatement. To start, a taxpayer must first apply for a penalty abatement and show that the failure to pay their tax debt still occurred even after reasonable attempts to comply with tax law. The Department of Revenue will also consider several other factors before granting a penalty abatement such as whether or not the applicant:

  • Has made timely payments to their tax debt in the past
  • Is attempting to correct and prevent future non-payments
  • Did not make payments as a because there was doubt of liability of the debt
  • Relied on another (such as a business partner or spouse) to file the tax returns, who failed to file
  • Relied on another (such as a business partner or spouse) to make payments to the tax debt, who failed to make the appropriate payments
  • There was a death, illness, or major emergency within their immediate family; or with the individual who files and made payments for their return
  • Experienced a natural disaster, fire, war or deployment, or other unavoidable absence
  • Was given advice from a tax representative or was heeding terms from written communication issued by the Department of Revenue
  • Had a limited knowledge, experience, or education that resulted in ignorance of tax law

The list is not conclusive and if you think that you may qualify for a penalty abatement contact our office to review your situation for possible qualification.