IRS Penalty Abatement

In many cases, the penalty and interest portion of the back taxes is quite significant. If you are facing penalties for not filing or paying your taxes on time, you may be able to get those penalties removed (or even get past penalties and interest refunded) through a method of tax negotiation known as penalty abatement or penalty adjustment. Abatement refers to eliminating an assessed tax liability and an adjustment reference reducing or altering an assessed tax liability.

Relief from penalties falls into four separate categories: reasonable cause, statutory exceptions, administrative waivers, and correction in service error.

If there is a reasonable cause for abatement or adjustment, the IRS may be willing to review the penalties which created a tax liability. Reasonable cause can include:

• Wrong mailing address
• A death or illness in the family
• An error caused by an IRS employee
• Natural disaster like an earthquake, flood, or other catastrophe

About one-third of tax penalties are eventually removed by the IRS through successful tax resolution. To request that a tax penalty be removed or refunded you need to fill out IRS Form 843. This form of tax resolution is called a “Claim for Refund and Request for Abatement.”

We can work with you to make payment arrangements that the IRS will accept. If there were circumstances beyond your control that prevented you from paying your taxes, our tax specialists can challenge the penalties and interest that have built up. 

Penalty abatement can be an important step towards resolving your back taxes. Optima’s tax attorneys and licensed tax professionals can help you determine if you qualify for penalty abatement or other tax relief programs.