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FAQs about IRS penalty abatement

Understanding the details of tax laws can sometimes baffle even the most knowledgeable. One concept that tends to confound many is the Internal Revenue Service penalty abatement.

If you owe penalties to the IRS, it could be for a variety of reasons. Perhaps you filed your taxes late or did not pay the right amount. Regardless of the cause, the resulting stress can be immense. If you find yourself in this situation, learning about IRS penalty abatement could be beneficial.

What does IRS penalty abatement mean?

IRS penalty abatement is a provision the IRS offers to lessen or cancel certain penalties. Penalties can arise from late filing, late payment or other noncompliance actions with tax laws. The IRS may grant penalty abatement if you can demonstrate reasonable cause for your failure to comply.

How can you become eligible for penalty abatement?

To become eligible for penalty abatement, you need to convince the IRS that you had a reasonable cause for not fulfilling your tax obligations. The definition of reasonable cause can vary but typically includes situations you could not control such as natural disasters, serious illness or theft.

What is the ‘first-time penalty abatement’?

First-time penalty abatement is an administrative relief the IRS offers to taxpayers who have not incurred penalties in the previous three tax years and have fulfilled all filing and payment requirements.

How do you request an IRS penalty abatement?

You can request penalty abatement by submitting a written request to the IRS. This request should explain in detail why you could not meet your tax obligations, provide evidence supporting your claims and explicitly ask for the reduction of specific penalties.

Is it possible to abate interest?

Although the IRS can lessen penalties, it does not have the same power to lessen interest. Interest continues to accumulate on any unpaid tax and penalty amounts until you pay the debt in full.

Understanding the IRS penalty abatement process is the first step toward handling your tax liabilities effectively. When you know your rights and the options you have, navigating the tax system becomes less intimidating.