Most of our clients show up at our office with a tax bill with penalties and interest. Penalties were originally meant to encourage timely filing and payment of taxes due from taxpayers. However, penalties have become an official source of IRS revenue. Penalties are often added automatically by IRS computers, but may also be added at the discretion of IRS personnel. Interest is added to a tax bill because the IRS view is that the taxpayer is borrowing the money owed from the government. The IRS can reduce or eliminate penalties for a reasonable cause. The term the IRS uses for the elimination of a penalty or interest is abatement. Penalties can be assessed for a variety of reasons, including failure to file, failure to pay, fraudulent failure to file, accuracy and fraud. For many of the reasons the IRS may assess penalties, arguments may be made to have those penalties abated. As with other IRS programs which may benefit the taxpayer, the process involved in obtaining an abatement involves a formal process and the use of appropriate IRS forms.