• June 12, 2019
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Have you received penalties for unpaid federal taxes? If you have, please read on. When a taxpayer is unable to pay their Federal taxes in time, they risk being subject to various penalties, but that doesn’t mean there is no way for redemption. The IRS has various provisions to help taxpayers clear their dues, and can even abate penalties and interest. Continuing on the subject, in this blog post, we present all you need to know about IRS penalty and interest abatement. Read on.

Penalty Abatement

IRS penalty abatement is a provision for the removal of certain IRS penalties. If you believe that you shouldn’t be required to pay certain Federal penalties or interest, you may apply for IRS penalty abatement. If your request is approved, the IRS will remove all of your penalties. If you want to apply for penalty abatement, you can contact The Law Offices of Nick Nemeth. Two common penalties that can meet criteria for penalty abatement are:

  • Failure-to-File: A failure to file penalty may apply if you did not file by the tax filing deadline.
  • Failure-to-Pay: A failure to pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline.

How to Calculate

Although both the penalties are capped at a maximum of 25% of the unpaid tax, they are calculated differently. The Failure-to-File penalty is generally 5% of the unpaid tax for each month by which the return is late. The Failure-to-pay penalty is generally .5% of the unpaid tax for each month it is late. The IRS will assess penalties for partial months. If, for instance, one owed $100,00.00 on their individual income tax return and filed an extension, but paid the total by October 15, the penalty would be approximately $3,000. If, however, in the same scenario, the taxpayer does not file an extension, the failure-to-file penalty may be capped, resulting in a much higher IRS liability.

Penalty Abatement Options

There are three main avenues to obtain penalty abatement:

1. First Time Penalty Abatement:  You may qualify for administrative penalty relief from penalties if:
  • You did not previously file a late return or have no penalties assessed against you for the previous 3 filing years.
  • You are current in your filing requirements or you have filed an extension of time to file for the current year.
  • You have paid or have arranged to pay any tax due.
2. Penalty Abatement Due to a Reasonable Cause:
  • Death of a family member or someone very close to you
  • Unavoidable absence such as being in rehab or jail
  • Held hostage in another country
  • Destruction of your records due to fires, floods, or other casualties

Interest Abatement Options

The IRS charges interest on all unpaid balances. Interest accumulates daily and is charged until the balance is paid or settled. If any of the tax and/or penalties are reduced, the IRS automatically reduces the related interest. Interest is statutory and cannot be reduced or removed for reasonable cause or as a first time abatement. The only way that the IRS will reduce the amount of interest that you owe is if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act. To check if you qualify for interest abatement, you should consult with a tax attorney like The Law Offices of Nick Nemeth.

Wrap Up

Now that you know the basics of an IRS penalty abatement and the eligibility criteria, speak with an experienced IRS tax attorney at The Law Offices of Nick Nemeth to find your way out of an IRS penalties or interest.  We have a team of experienced IRS tax lawyers and professionals with proven results in dealing with all types of IRS tax-related issues, especially penalty and interest abatement. For a confidential, no-obligation consultation, fill out our contact form or simply call (972) 426-2553

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What Our Clients Have to Say

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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