What About Penalty Abatement?

Posted by Jeffrey Siegel on January 19, 2016

Many clients are resigned to paying the tax, but they take a different view of the penalties assessed by the IRS. Here is some information on IRS penalties, and how they can be reduced or eliminated.

There are two main types of penalties assessed to the taxpayer: failure-to-file and failure-to-pay penalties.

You will not have to pay a penalty if you can show that you failed to file or pay on time because of reasonable cause as opposed to willful neglect.

What is reasonable cause?

  1. A medical condition (including addictions) that prevents you from filing or paying taxes.
  2. Reliance on erroneous advice provided by a professional hired for tax preparation, tax deposits and tax filings.
  3. An Act of God that caused a hardship that did not permit tax compliance.
  4. Loss of theft of records that were outside the client’s control.
  5. The taxpayer was victim of a crime, such as theft or embezzlement.

The IRS will want documentation of these reasons.  Police reports, medical records and other evidence should be submitted with the Application for Abatement (Form 843).

Call Jeffrey R. Siegel, your Kansas City Tax Attorney at (913) 735-4829.