IRS Penalties and Interest

If you fail to pay your back taxes, it can result in IRS Penalties and Interest that can compound over years and make your tax debt substantially larger than it initially was. Non-payment of this debt can then result in even more IRS Penalties and Interest, a levy on your wages or bank account, a lien against your property, or even a seizure of your assets.

IRS Penalties can be applied for filing your tax return late or for paying your due tax late. The IRS Penalty for filing late is generally 5 percent each month, or partial month, and can be up to 25 percent of the amount due on your tax return.

The IRS Penalty for paying late is 0.5 percent per month, up to 25 percent of the unpaid amount that is due.

There are some situations and circumstances in which you can have your IRS Penalties abated or eradicated either partially or in full for one tax year or multiple tax years. To submit this Penalty Abatement request to the IRS, a taxpayer must have reasonable cause that is specific for each year and must be able to explain why the penalties should be removed.

Penalty Abatement

Besides the "Offer in Compromise" the IRS offers an alternative program for reducing delinquent tax debt. Clients seeking tax relief from their tax liability can still be helped. Our office can work with you and make payment arrangements that the IRS will allow. If there were circumstances beyond your control that prevented you from paying your tax debt and led to delinquency, we are able to challenge the Penalties ( Penalty Abatement ) that have built up. Relief from Penalties falls into four separate categories:

Reasonable Cause - mistake made by the taxpayer, ignorance of law, death, serious illness, unavoidable absence or divorce.

Statutory Exceptions - simple or complex legislative tax code changes.

Administrative Waivers - undue hardship, fire, flood, natural disaster, bad legal/tax advice.

Correction of Service Error - mistakes made by the IRS.

If an Offer in Compromise is not the best solution in resolving your tax debt, then a Penalty Abatement is generally a better alternative. Call our office to discuss your options.

The IRS will not be deterred and they won't disappear. Call us for a FREE CONSULTATION and let's discuss all YOUR options in ending your tax problems.