Larry Hess CPA
The IRS has charged me penalties and interest. Can I get them removed?
Yes - By taking advantage of the First Time Abatement (FTA), 3 types of penalties can be removed without your having to prove anything: the penalties for not prepaying enough tax, filing your return late and paying your tax late. The requirement for the FTA is that you must not have had the same penalty in any of the 3 years preceding the year of the penalty. For example, you file your 2020 return late and the IRS charges you the late filing penalty. The IRS will remove that penalty if you filed your 2017, 2018 and 2019 returns on time. The easiest way to this done is to call the IRS and ask for the First Time Abatement (FTA). Note: Writing a letter for an FTA will take a very long time to get your result.
Maybe - Generally, penalties can be removed if you prove to the IRS that there was "reasonable cause," a term that is defined in the tax law. Reasonable cause, in non-technical terms, broadly means the required actions (prepaying taxes or filing on time or paying on time) could not be taken because of circumstances beyond your control. These circumstances do not include financial problems.
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. Important: Your statements of the reasons are not sufficient alone; you 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 circumstances are the same. If that happens you will have the opportunity to appeal. In any case, you should pay the taxes on which the penalties are based. This will stop additional penalties and interest and make it easier to deal with the IRS's collection efforts.
No. The law does not permit the IRS to remove interest except in very limited circumstances. Note that interest is charged on unpaid penalties, so if penalties are removed the related interest is also removed.