Thursday, December 19, 2019

Abating (remove or eliminate) IRS Tax Penalties

Many clients have contacted us regarding the discharge of taxes in bankruptcy,
offers in compromise and installment agreements with IRS and recently  penalties
assessed by IRS.

The IRS offers 3 types of penalty relief:

1. Reasonable Cause-this appears to be our best chance  to abate penalties
2. Administrative Waiver and First Time Penalty Abatement
3. Statutory Exception for example a taxpayer  got bad advice from IRS

Reasonable cause is relief we may grant when a taxpayer exercises ordinary business care and prudence in determining
their tax obligations but is unable to comply with those obligations due to circumstances beyond their control.

Reasonable Cause is based on all the facts and circumstances in your situation. 
The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your
Federal tax obligations but were nevertheless unable to do so.

Typical fact patterns involving reasonable cause for failure to file a tax return, make a deposit, or pay tax when due include:

1. Fire, casualty, natural disaster or other disturbances
2. Inability to obtain records
3. Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family

Jim Shenwick, Esq. has an LLM in Taxation from New York University Law School

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