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IRS Penalty Abatement: Five Tips to Reduce or Eliminate Penalties From Back Taxes and Unfiled Tax Returns

If you owe the IRS taxes or have unfiled tax returns, the IRS will come after you for the amount of back taxes owed, plus enough interest and penalties to exponentially increase your original bill. Taxpayers who are victims of unusual circumstances and in need of back tax relief, can request an IRS penalty abatement. In many cases when a taxpayer requests an IRS penalty abatement, the IRS removes 100% of the penalty. You can get IRS penalty abatement, but you need to play your cards very carefully with the help of a tax attorney or Certified Tax Resolution Specialist.

IRS Penalty Abatement Tip #1: Come Clean Fast or Face Potential Jail Time The IRS takes a very dim view of taxpayers who don't file a return or pay their taxes. They have the power to prosecute back tax cheats and ask the judge to give you a year in jail for every year you didn't file and/or pay. The longer you wait, the less likely the IRS will be willing to be to grant an IRS penalty abatement. The penalty for filing late is generally five percent each month or partial month of the estimated back tax amount due which can double or triple your bill.

IRS Penalty Abatement Tip #2: File Your Own Tax Return Even If It's Late. If you don't file a tax return, the IRS will do it for you. A Substitute for Return will not give you credit for deductions such as exemptions for spouses, children, interest and taxes on your home, business expenses, etc.

The IRS's mercies are few and far between, but they do allow taxpayers or their tax attorney or Certified Tax Resolution Specialist to file corrected returns at any time. Doing so will bring you into current status and open the door to negotiating an IRS penalty abatement.

IRS Penalty Abatement Tip #3: Get Your Story Straight. To qualify for back tax relief, the IRS requires that you have "reasonable cause" to qualify for an IRS penalty abatement. There are no hard and fast rules about who will receive an IRS penalty abatement, but there are some general guidelines. Your tax attorney or Certified Tax Resolution Specialist can help you decide if you qualify. The IRS will take into consideration the following conditions:

  • Someone in your immediate family has died or suffered from a serious illness.
  • Divorce with missing financial records.
  • The unavoidable absence of the taxpayer.
  • Being incarcerated.
  • Theft or destruction by an act of God of the taxpayer's records.
  • Being unable to determine the amount of tax due for reasons beyond your control.
  • Unable to pay taxes due to a civil disturbance.
  • Lengthy unemployment.
  • Being the victim of bad advice form a tax expert.
  • Ignorance of the law. (You must be able to prove that you made a reasonable effort to learn the law.)
  • Incorrect oral or written advice from the IRS.
  • Your tax or payroll service did not file or pay your tax amount on time.

IRS Penalty Abatement Tip #4: Provide Supporting Facts and Documentation.

Be prepared to back up the reason you want an IRS penalty abatement with documentation. If someone died, bring a certified copy of their death certificate. If your computer crashed, bring a copy of the trouble ticket from your IT vendor. If your house or business was damaged or destroyed, bring the police reports and insurance documentation. The more detail you can provide, the better.

In deciding whether to grant an IRS penalty abatement, Internal Revenue will consider:

  • Why did the event in question prevent you from filing and or paying your taxes?
  • Did you single out the IRS and pay other creditors?
  • What is your history with the IRS? Repeat offenders have a tougher job of getting an IRS penalty abatement.
  • Were the circumstances truly unavoidable?

IRS Penalty Abatement Tip #5: Hire the Tax Expert Who Will Get the Job Done Right. If you take on the IRS by yourself, they will eat you alive. A qualified tax attorney or Certified Tax Resolution Specialist has the experience and expertise to give you real back tax help. Most tax attorneys or Certified Tax Resolution Specialists will compose a legal letter, delineating your circumstances and citing recent or past court cases where these verdicts were in favor of the client with the same or similar set of circumstances you have.

IRS personnel are paid to "just say no." The IRS is in the business of grabbing as much money as possible, not the business of writing off penalties. They are most brutal collection agency on Earth.

Fighting the IRS on your own is like going to court on murder charges without a lawyer. If you have incurred the wrath of the IRS and have good reason to ask for an IRS penalty abatement, then you owe it to yourself and your loved ones to hire a tax attorney or Certified Tax Resolution Specialist who will give you your best chance of IRS penalty abatement.

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About the Author

Michael Rozbruch is one of the nation's leading tax experts. A Certified Tax Resolution Specialist (CTRS), licensed CPA and the founder of Tax Resolution Services. He helps individuals and small businesses solve their IRS problems and is dedicated to educating the public on tax planning and other strategies for managing their personal and business finances.

For more information on achieving a tax resolution for your IRS problems, visit for a free tax relief consultation or call 866-IRS-PROBLEMS.