Know When to Request an IRS Penalty Waiver

Reasonable Causes for FTA

So, the year came and went and filing and paying your taxes didn’t even cross your mind! Unfortunately, while you can easily forget about your taxing duties, the IRS won’t. Now, you’ve found yourself served with a penalty, thinking there’s no way out. Or is there?

Unlike what many people think, the IRS isn’t an arbitrary tyrant, deaf to all reason. In fact, they’re quite open to hearing out your case and reconsidering their original penalty ruling.
Can you get a penalty waiver and be on the clear once again? It depends. If you have a “reasonable cause” for failing your taxing duties, you can be eligible for the “first-time penalty abatement (FTA), also called simply IRS penalty abatement.

What is a “reasonable cause” for penalty abatement?

The most common causes for IRS tax penalties are also eligible for tax penalty and interest abatement. Such cases include not filing your taxes or being unable to pay them by the set due date.

But, simply wanting these tax penalties to disappear isn’t enough. You have to show the IRS that you had a legit reason, or in legal terms reasonable cause, for not complying with your taxing duties.

Related Blog: IRS More Willing to Compromise Than Ever

Here are a few reasonable causes for FTA:

Natural Disaster

Where your records and other important documents destroyed or lost during a fire, flood or another natural disaster? This is a good enough reason for the IRS to waive your penalties.

Social Unrest

Couldn’t leave your home or job because streets were blocked off by a riot, manifestation or crime scene? The IRS considers these cases serious disturbances that can prevent you from complying with your tax obligations.

Physical Confinement

The IRS can’t blame you if being absent from your taxing duties was unavoidable. After all, how can you pay taxes if you are in a coma in the hospital or held hostage abroad? The IRS isn’t an evil monster and will be understanding of these extreme case scenarios.

Death of a Family Member

This one is self-explanatory. It’s impossible to go out and pay your taxes if you are dead. Another huge factor the IRS takes into account is having an immediate family member that took care of financials pass away.

Related Blog: 6 Must-Know Facts about Penalties on Late Filing and Late Payments

If you have a valid reason for not paying or filing your taxes, then you are eligible for an IRS penalty abatement. But, before it is granted to you, you have to prove your case. This involves providing all additional information necessary to evaluate your case.

You should provide any document that can work as evidence and clear up all surrounding circumstances. The IRS will also consider your history and whether this is a first time or repeat offense.

At the end of the day, a tax law expert will be your best resource in determining whether your situation is fit for penalty abatement.

The Last Word

Need help processing your IRs penalty and interest abatement? Nick Nemeth’s Law offices can help! Our attorneys help hundreds of clients with their taxing problems every week. With our expertise, you can get the solution you need. Contact us to schedule a free, no-obligation consultation. Fill out our contact form or simply call (972) 484-0829.