Abatement of Penalties

When the IRS believes you’ve made a mistake with your income taxes or it discovers you haven’t filed your taxes at all, it will assess a penalty and interest charges. If you’ve received a notice indicating that you owe a penalty, do not ignore it. Ignoring tax notices can result in wage garnishment, asset seizure and other extremely undesirable consequences.

If the IRS or another tax authority has assessed a penalty for nonpayment or underpayment of taxes, call BC Tax. We help clients across Denver, the state of Colorado and the U.S. with IRS penalty and tax abatement. We can negotiate with the IRS on your behalf and request a tax penalty abatement.

First Time Penalty Abatement

The IRS or other tax authorities can assess a penalty for a variety of reasons. These reasons include failing to file, failing to file on time without an extension and failing to pay income taxes on time. The good news is that the First Time Penalty Abatement policy can help you avoid paying this fee.

Here’s how it works. With every day that passes without you paying your penalty, the IRS will increase its amount until you pay your bill in full. But if you meet certain qualifications — such as making a payment arrangement — or you haven’t owed a penalty in the prior three years, the IRS may waive your penalty.

If you’re unsure whether or not your penalty qualifies for abatement, keep in mind that you may qualify based on Reasonable Cause.

What Is Reasonable Cause?

If you don’t qualify for the First Time Penalty Abatement program, you may get penalty relief in other ways, such as Reasonable Cause. If you have a valid reason for failing to file a return or make a tax deposit, the IRS will waive the penalty.

Common situations that qualify for Reasonable Cause include death, serious illness, natural disaster, fire and the inability to obtain necessary documentation. The IRS may also accept other reasons not listed here that prove you acted responsibly and were unable to file or pay for reasons beyond your control.

The IRS will look for proof that you were unable to meet your tax filing or payment obligations. They’ll want to know what happened and where, how events affected your ability to meet other daily responsibilities and how you handled your affairs once you realized you couldn’t meet your obligations. You should expect to provide documentation such as court records or a letter from a physician confirming incapacitation.

Reaching out to BC Tax as soon as you have a problem will help you minimize or eliminate penalties and associated interest.

Will the IRS Abate Interest Charges?

Yes and no. The IRS will not abate interest charges on your unpaid tax balance, but it may reduce or eliminate interest associated with the penalty. It’s important to remember that the IRS will continue to accrue interest until your tax bill is paid in full.

Turn to BC Tax for IRS Underpayment Help in Colorado and Beyond

Do you need tax abatement help? BC Tax has helped individuals and businesses in Denver, Colorado and across the country win IRS tax penalty abatement from federal and state tax authorities. If you’ve received a notice from the IRS or your state tax authority, don’t ignore it — call us instead. We’re ready to serve you.

Get in touch with us by calling (800) 548-4639 or by filling out our online form.

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