Penalty Abatement

You may be surprised to learn that even the IRS can offer a measure of grace, otherwise known as penalty abatement or penalty relief. To abate a penalty is to remove and cancel it after the IRS has already assessed it.

In that sense, if you receive notice of a penalty, all may not be lost. Promptly retain and consult one of the tax attorneys at the Law Offices of Beverly Winstead in both Baltimore and Laurel, Maryland, to see if the IRS may abate your penalty on the terms indicated below.

Penalties Subject To Abatement

Abatement, where possible, has several advantages. The first one is most obvious: you don’t have to pay the abated penalty, and IRS penalties can be substantial. The most common failure-to-file and failure-to-pay penalties each carry a monthly penalty of five percent of the tax owed for up to a five-month maximum equal to twenty-five percent of the tax owed, although the IRS will not make you pay both penalties at once. Both penalties, though, can qualify for penalty relief, as can other penalties applicable to individuals and businesses.

Other Advantages Of Abatement

Abatement, where available, has other advantages beyond not having to pay the penalty. One common problem with negotiating an offer in compromise is your inability to pay even the lower compromise amount. The IRS doesn’t generally accept offers that you cannot pay. Penalty relief, though, can lower the compromise amount to within your reach. When the IRS abates the penalty, it also abates the interest on the penalty. Abatement also ends enforcement action on the penalty, meaning that it can save your property or income.

Abatement Grounds

The tax code permits the IRS to recognize three grounds for penalty relief: (1) reasonable cause; (2) administrative relief including a first-time penalty abatement for new filers and filers who don’t have prior penalties within three years; and (3) statutory exceptions like incorrect advice from the IRS. Reasonable cause can include a death in the family, a disaster that destroys records, or other reasons to show due care in trying to file and pay timely. The IRS, though, requires a timely submission stating facts and showing documentation, which is why you need the guidance of an experienced attorney to help you through the process.

Avoiding Criminal Penalties

You should take care to treat an IRS civil penalty with the seriousness it is due, whether you can qualify for penalty relief or not. Most penalties are civil; you resolve the penalty by paying it with interest. The IRS, though, has tax-code authority to charge crimes such as the willful evasion of assessments or payments, certain forms of fraud and false statements, interfering with IRS enforcement, and aiding and abetting these crimes.

Get Started On Your Penalty Abatement Case

It is vital that you do not let a civil penalty pass unnoticed and unaddressed. Seek the penalty’s abatement. Keep your financial house in order. Act promptly to retain one of the experienced tax attorneys at the Law Offices of Beverly Winstead now at 301-760-2003 or contact the firm online to pursue your penalty relief.