Penalty Abatement

When the IRS determines that taxes are owed, and they are late, the taxpayer is assessed not only with the tax, but with additional penalties that are tacked on and increase the total balance due. Frequently, penalties added on makes the tax bill much, much larger.

Sometimes, even if the IRS’s calculation of what the actual tax due is correct, the taxpayer can get the penalty charge reduced or even waived totally.

If, for example, the taxpayer has a reasonable excuse for how the problem occurred which ended up causing penalties to be imposed (for example, a flood destroyed records which caused a significant delay in preparing and filing a tax return) AND the problem has been solved so that it’s not likely to happen again, AND the taxpayer is now current in filing returns and paying tax, there may be an opportunity to reduce the tax due by getting penalties reduced or removed. This is called “penalty abatement.”

I can do a careful analysis of the tax and the taxpayer’s circumstances and get a sense of whether the tax is correct, or not, and whether the penalty might be abated: reduced, or wiped out entirely.