IRS Penalty Abatement with The Law Offices of Nick Nemeth
  • May 27, 2019
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The IRS introduced the First-Time Abatement (FTA) about 18 years ago, but it remains largely unknown and unrequested by qualifying taxpayers. If you feel you should be exempted from some federal penalties and interests, applying for penalty abatement may work for you. Your penalties and interests may be removed, partially or entirely, if you qualify for the reduction. Applying for IRS penalty abatement is a complex process that requires professional help to stop the IRS collection process. The services of experienced tax attorneys such as those at the Law Office of Nick Nemeth are crucial to finding a workable solution for your tax debt situation. Without a reasonable cause for missing your tax deadline, your chances of qualifying for a tax abatement may be minimal. This means that you will have to convince the IRS that there was a legitimate reason for filing late or not meeting other tax obligations.

1. What is the IRS Penalty Handbook?

The IRS penalty handbook provides details and information on the assessment of penalties, the amounts of such penalties and the considerations for penalty and interest abatement. The IRS penalty handbook is the primary source for penalty management.

2. What penalties does the FTA cover?

The FTA covers three types of penalties; failure-to-file, failure-to-pay, and failure-to-deposit. Failure-to-file is imposed if you file your taxes late, or failed to file. Its rate is 5% of your balances due per month. The failure-to-pay penalties are penalties incurred when you fail to pay the full amount owed by the payment deadline. The IRS assesses a penalty of 0.5% per month of the outstanding tax debt.  Finally, the failure-to-deposit penalty is imposed on a business that fails to deposit as scheduled, in the required manner or the right amount. The rates for this penalty are: 2% for 1-5 days delay, 5% for 10 days delay and 10% for deposits made 15 days (or more) after the scheduled date.

3. What are “reasonable causes” for penalty abatement?

A reasonable cause is an excuse for not filing or paying your interest or penalties on time. Some examples of reasonable causes include:

  1. A competent and trustworthy tax professional gave you the wrong advice regarding your interests and penalties
  2. The death of a family member
  3. Floods, fire or other casualties destroyed your records
  4. You were held hostage in a foreign country
  5. Your attempts to make payments or deposits were disrupted by civil disturbances like a riot or mail strike
  6. You could not determine the amount of taxes to pay for reasons that were beyond your control
  7. Some unavoidable absence (such as being in jail or rehab) held you from meeting your tax obligations

4. Can I Still Qualify if My Situation is Not in the list of reasonable causes?

If you can’t find your situation in the list above, the IRS may still look deeper into your incident. IRS agents may ask some questions to determine the authenticity of your claim.  Such questions include;

  1. What circumstances caused you to pay late? How did these circumstances affect your tax compliance?
  2. How did you handle other financial problems during your situation? Did you ignore other bills as well during the stated period?
  3. Do you have a history of making late payments? If so, your chances of qualifying for an abatement dramatically reduces
  4. Do the date of the issue highlighted coincide with filing deadlines or tax due dates?

5. How Much Money Can be Abated?

Once you qualify for tax abatement, the IRS will only remove penalties incurred in the first year. Penalties may have a monetary limit of the amount that can be waived although IRS has not published any limit. The amount appears to be any amount not exceeding $10,000.

Wrap Up

It’s is always worth trying to reduce your tax interests and penalties even if you have a weak story. The IRS gives you only one shot to make your case; hence, it is wise to make the most persuasive possible case the first time. At the Law Offices of Nick Nemeth, we understand the difficulties involved in dealing with the IRS, which is why we have a specialized team comprising of experienced financial tax analysts, case managers, EA’s, and CPA to walk you through the intricacies of penalty-related tax laws. If you are interested in learning more about how to use IRS’s own programs to eliminate or minimize your tax debts, do not hesitate to fill our contact form for a free consultation. Alternatively, you can reach us at (972) 426-2553.

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What Our Clients Have to Say

Brent VahleBrent Vahle
19:13 02 May 24
I called to see if they could help reduce some penalties and fees. The person I spoke with told me it might be counterproductive for them to take my case since their feels would likely equal the amount of penalty/interest abatement. I decided to pass on moving forward but was so happy to hear a legal team, or any business for that matter, who has that much integrity. I feel most others would likely try to take my money anyway. I hope I never have to go through this again, but if I do, I will definitely use the Law Offices of Nick Nemeth!
Jason WinkleJason Winkle
18:44 02 May 24
Jaime Flores was very friendly, professional, and knowledgeable. She gave me some very valuable information which helped guide me with a plan of action. The free consultation is very much appreciated.
Matthew SwigartMatthew Swigart
12:14 02 May 24
Great attorney who was able to provide quick and useful advice. Although my situation did not warrant their services, they still took the time to discuss solutions I could explore. I highly recommend visiting this office!
Tony PantojaTony Pantoja
12:57 09 Apr 24
Very professional and very knowledgeable, Jamie Flores was very straight forward and professional, a firm that doesn’t just take your money, Thanks
Carla AtwalCarla Atwal
10:52 02 Apr 24
Nick was wonderful in guiding me with direction on some tax questions I had. He was concise, and to the point, and was happy to provide general info to me at no charge. I truly appreciate him and would highly recommend him.
Miguel AlvaradoMiguel Alvarado
15:56 25 Mar 24
By far the best attorneys I have ever worked with. They’re are very helpful and supportive from day one. They went above and beyond to make sure all my documents were submitted on time and gave updates as soon as they received them. I cannot name a single flaw in their work. Their team of assistants are very professional and seem to all be on the same page. I’ve made multiple phone calls and sent a ton of emails to their staff and they were able to help me all through the course of the case. I cannot express my gratitude enough for how excellent they handled my case.
Lucy FoyLucy Foy
06:55 19 Jan 24
My first appointment I had with, Tax Attorney Nick Nemeth, gave me such a sense of relief. He listened and gave me his professional advice, Mr Nemeth took my case. I was well kept updated, by phone calls and letters. That really impressed me and gave me so much confidence in them. The case went on for a couple of months. The day I received the call from one of his team members Kyle, informing me that the case was resolved and that I owed absolutely nothing to the IRS, I was overwhelmed with joy. I would recommend this law firm to anyone that needs help, with any tax issue. Thank you, to the Law Firm of Attorney Nick Nemeth and his team.
Bradley RunyonBradley Runyon
20:17 13 Jan 24
I received a tax bill in the mail from the IRS last year in 2023. The fees and penalties I owed were something I myself could not afford. I reached out to Nick Nemeth's firm and received the best experience you could imagine. The team was professional, educational, and fast. If you have a tax issue with the IRS using another firm other than Nick Nemeth's would be an error in judgment. I would recommend their services above others.
Sue HulsemanSue Hulseman
19:55 11 Jan 24
Working with Nick Nemeth and his team to resolve my debt with the IRS was the best decision I could have made. I felt such relief knowing I didn’t have to deal with the IRS myself. They did a wonderful job and were responsive to my questions and kept me abreast of my case. My outcome was exactly what I was hoping for. I strongly recommend using them if you have an issue to resolve with the IRS.
20:53 21 Dec 23
I had an incompetent tax preparer, who also ignored several notices from the IRS, which in the end resulted in a lien on my property. I did not know what to do and an attorney friend recommended that I contact the Nick Nemeth Law Offices. I met with Jamie Flores and Ivan Nalbantov in December 2021 for a free consultation, and right away was impressed by their thorough examination of my paperwork and extensive knowledge of IRS tax laws. I felt not pressured and appreciated their advice and in the end decided that I would pursue resolving the issue by myself. I paid the IRS Civil Penalty and, as recommended also submitted a letter to the IRS requesting a refund and explaining what happened. I am glad to report that my persistence finally paid off. My case took two years to resolve and I finally received a full abatement/refund check from the IRS in December 2023. I could not have done this without the straightforward recommendation of Jamie and Ivan; and I highly recommend the Nick Nemeth Law Offices to anyone needing help with the IRS.
Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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