The IRS assesses penalties and interest on tax liabilities so over time taxes due years ago can increase from hundreds to thousands of dollars. The IRS will sometimes lower or eliminate these fees if we can offer a reasonable cause for non-payment or non-filing (death, illness, fire, lack of funds, etc.) We recommend paying the tax prior to making the request.

Common Types of Penalties

Filing late If you do not file your return by the due date, you may have to pay a failure-to-file penalty. The penalty is usually 5 percent for each month or part of a month that a return is late, but not more than 25 percent.

Failure to Pay Penalty The failure-to-pay penalty is calculated based on the amount of tax you owe. The penalty is .5 – 1.5 percent for each month the tax is not paid in full.

Failure to File Penalty The failure-to-file penalty is calculated based on the time from the deadline of your tax return to the date the return is actually filed. The penalty is 5 percent for each month or part of the month that the tax return is late, up to a total maximum penalty of 25 percent

Accuracy Related Penalties The two most common accuracy related penalties are the “substantial understatement” penalty and the “negligence or disregard of the rules or regulations” penalty. These penalties are calculated as a flat 20 percent of the net understatement of tax.

What can we do to help?

Our tax professionals can help you to compile information and a written request to the IRS. We will help you structure a letter and the appropriate documents that will explain the reasons for your particular situation, and why you should be considered for penalty abatement. We will suggest the appropriate types of documents to gather and establish a case with these supporting documents that will serve as proof of your circumstances.