A tax abatement is usually rare, but there are two exceptions of circumstances where the IRS can withdraw a penalty. First, if you fail to pay fines, and secondly, if you fail to file your taxes returns. However, you have to make a written or verbal request for the reduction.
The following are some facts to drive the point home:
- There are approximately 150 tax penalties that the IRS issues to individual taxpayers and companies.
- However, two out of the one-fifty make up 70% of the penalties issued annually by the IRS.
- The IRS will only abate the two penalties above because of a justifiable reason or the first-time liability.
How Do You Request Penalty Abatement?
Anthem Tax will guide you through the process. It is up to you whether to call or email us. If it is your first time dealing with the IRS, we will provide you instructions on how to request a refund or reduction.
There are two main reasons the IRS may consider your request:
- The first-time abatement- this is when you have never had any tax compliance trouble in your history.
- Justifiable cause- this is when you have an actual reason for failing to pay your taxes or file your returns. Remember, this cause has to be within the stipulations of the IRS standards.
Therefore, when requesting tax reduction for the first time, we will help. Naturally, a call will save you time and shorten the delays of waiting for the IRS. Moreover, we will answer your call immediately.
However, there are times when they will advise you to make a written request to their offices. So, write a letter requesting the first-time abatement or send a Form843. Usually, written requests for reduction take up to two to three months for complete processing.
On the other hand, whenever you call for a reasonable cause reduction, you should have a penalty of less than $500. In this case, the IRS customer support will ask for more information then ask you to send a written request. If you are lucky, they will give you an immediate response.
Send Form 843 for the written reasonable cause for abatement as well. Unfortunately, the IRS takes a little longer to answer this written request, between three to four months.
What To Do if Your Request Gets Denied
If you receive IRS letter 854C, IRS denied your abatement request. Although this turn of events is disheartening, you have, at most, 60 days to file for an appeal after receiving the letter. Unfortunately, the IRS is highly likely to deny your request the first time around.
There were so many declines in the past because of technical reasons. For instance, almost all requests made by the public, whether they were the first-time or reasonable cause, were denied. Fortunately, the problem was that the IRS used an automated tool to determine an individual’s eligibility for penalty relief. But, sadly, this tool proved to be unreliable.
The only way the IRS will analyze your case extensively is through an appeal. The appeal adds between three to nine months to the process. However, a request is the only way to ensure the court does not issue a subpoena.
If you would like to shorten that time, apply for a Collection Due Process hearing. This application is only viable if the IRS has already moved forward with the enforcement of the penalty. Moreover, this process shortens your abatement acquisition by five months.
Other Penalties To Look Out For
Aside from the failure to file returns and pay your taxes, there are other common reasons the IRS can issue a penalty. These charges are also eligible for abatement if you request them. These include:
Estimated Tax Penalty
These are usually issued when business owners don’t make enough to pay their tax requirements. Such a scenario could result from a disaster that hindered the entire operation of the business.
Usually, there is no need to contact the IRS; you can address this complaint with form 2210 when filling returns. If a disaster was out of your control, you can still use Form 843 and explain your case. This answer will take two to four months.
This penalty is usually due to neglect to disclose your total amount. The IRS will conduct an audit before issuing abatement. Under this case, the IRS rarely gives a discount unless the tax audit confirms the reality of your situation beyond a reasonable doubt.
IRS seeks to prevent any form of tax evasion or fraud. Therefore, if you are experiencing bankruptcy or a financial hardship, our tax debt relief experts are here to help.