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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.
- 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.