The IRS has charged me penalties and interest. Can I get them removed?
The answer is maybe, yes or no and - t depends. Penalties The Maybe.
Generally, penalties can be removed if you prove to the IRS that there
was "reasonable cause abatement", a term that is defined in the tax law.
Reasonable cause, in non-technical terms, means the required actions
(prepaying taxes, filing on time, paying on time) weren't taken because
of circumstances beyond your control. These circumstances do not include
financial problems. The penalties are for underpayment of estimated tax, filing late and paying late. The
procedure is to make the request in writing explaining the exact
circumstances that affect your ability to comply for each type of
penalty for each year. This can be tedious if you have several types of
penalties for several years. Sometimes it can be best to send a separate
letter for each year. In addition,must provide proof of the
circumstances. Getting
an answer to these requests will take long time and you may not get the
same answer for the same penalties for each year even though the
cirumstances are the same. If that happens you will have the opportunity
to appeal. The Yes.
Three types of penalties can be removed without your having to prove
anything. They are the penalties for not prepaying enough tax, filing
your return late and paying your tax late. The requirement is that you
have not had the same penalty in any of the most recent 3 years, the IRS
will remove the current one. The easiest way to get this done is to
call the IRS and ask for First Time Abatement (FTA). Writing a letter
for an FTA will take a very long time to get your result. Interest The No.
The law does not permit the IRS to remove interest. Note that interest
is charged on unpaid penalties, so if penalties are removed the related
interest is also removed. |