If you fail to file, pay, or neglect your taxes in any way, the IRS will find out. The penalties and interest they impose can pile up and become a bigger problem to deal with than the tax you may have owned in the first place. If you find yourself in this situation for the first time, a tax attorney can file a tax abatement, requesting the IRS to eliminate certain penalties on your account.
What is a First-Time Penalty Abatement (FTA)?
A first-time penalty abatement (FTA) is a form of IRS debt forgiveness that relieves taxpayers from a variety of penalties involved with the following:
Failure to file – If you file a late tax return, you may trigger a failure to file penalty of up to 5% per month, to a maximum of 25%, of the amount of tax you owe.
Failure to pay – If you owe IRS money or you’re late on any payments, a failure to pay penalty can add 0.5% per month, to a maximum of 25%, for late payment.
Failure to report tax liability – Also known as an accuracy-related penalty, failing to report a tax liability can cost you anywhere from 20% to 40% of the tax due on the total amount of under-reported income.
Fraud: If you knowingly deceive the IRS, you risk a penalty of up to 75%.
IRS Debt Forgiveness: Everyone’s Entitled to One Mistake
If certain criteria are met and you have a clean compliance history, you may be entitled to this form of IRS debt forgiveness. In order to qualify for the first-time penalty tax abatement, you must:
• File all required returns (including filing back taxes) or request an extension
• Pay or arrange to pay all taxes due
• Have no outstanding IRS issues
• Have no prior penalties for the three years before the tax year you’re requesting the FTA
Owe IRS Money? Drowning in Interest? An FTA Can Help.
To qualify for this form of IRS debt forgiveness, you’ll need to prove “reasonable cause” for your request. This is why it’s so important to have legal representation. From theft of your records to a death in the family and a long period of unemployment reasonable cause can get you penalty relief, along with a reduction or removal of any interest charged on the penalty. If you still owe IRS money after that, interest will continue to increase until the amount is paid in full.
If you need help filing back taxes or managing penalties imposed on your tax account, contact Tomes Law Firm, PC for a free initial consultation. We’re passionate about getting you the tax relief you deserve!