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Penalty Abatement

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Is Penalty Abatement Possible?

Yes. It is. Taxpayers may qualify for Penalty Abatement if this is their first-time paying penalties to the IRS or state due to unpaid taxes from a reasonable cause or circumstances that were out of their control.

Such as:

  • Natural disasters
  • Inability to obtain records
  • Death, serious illness, loss of a job due to a poor economy, etc.

The IRS or the state taxing authority will accrue interest on any outstanding tax balance and assess penalties for a taxpayer who fails to pay their taxes in full or on time. If not properly dealt with over a short amount of time, the total back taxes can increase dramatically.

Penalty abatement allows a taxpayer to request a first-time abatement (FTA) of certain penalties for a single tax period.

Individual taxpayers may request either an FTA or a penalty for failure to file a tax return by the filing deadline date or a penalty for late payment of tax.

Business taxpayers can request an FTA for the following penalties:

  •       Failure to Timely Deposit payroll taxes (FTD penalty)
  •       Failure to file a tax return by the filing deadline date
  •       Late payment of tax.

The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of an individual’s unpaid taxes.

If you are interested in the First-Time Penalty Abatement program, feel free to call us at 1-800-901-0885, and the Coast One Tax Group team will be happy to help! Our experienced team of tax experts is committed to reducing the money owed to the IRS and State Tax Agencies.

End Your Tax Problems. Start with Free Consultation.

What is Penalty Abatement?

It is a penalty waiver granted on a State government or IRS level for those who received fines regarding late or unfiled taxes. Many take advantage of this program as it is a way to get rid of tax penalties that can add up to approximately 25 percent of total tax bills!

How does it work?

Individuals or businesses must request the IRS to receive abatements that failed to pay or file taxes. 

Reasonable Cause Penalty Relief: 

Explain circumstances beyond the individual’s control that demonstrate both the IRS or a state taxing authority’s inability to file for taxes. Examples of the following are:

  • Natural disasters
  • Inability to obtain records
  • Death, serious illness, lost job due to poor economy, etc.

The government may deem a case with a reasonable cause by warranting the abatement (removal) of penalties. However, the individual must prove their circumstance to be a reasonable cause, for their inability to timely file tax returns or pay taxes.

First-time penalty abatement (FTA): 

The first incident recorded in which an individual needs to apply for penalty abatement. The following circumstances fall under the category of (FTA):

  • The individual or entity did not previously file a return or have penalties for the three tax years before the filing tax year in which the penalty was received.
  • All currently required tax returns or extensions are filed.
  • An individual or entity has payment arrangements for any and all taxes due.

In many cases (but not all), if an individual qualifies for IRS abatements they are likely to qualify for fines on a state level as well. Also, the sooner one requests their tax abatements, the sooner their fines are waived, and the lower their interest payments are. Therefore, being proactive with late and unfiled taxes is essential if you’re looking to resolve this case quicker.

Still impossible to pay the remaining tax liability in full? An individual should contact tax professionals who can assist them in resolving this issue. You can call or contact a tax relief specialist here at Coast One Tax Group who would be happy to resolve your tax issues.