Your Tax Debt Grows
Having a tax debt can be a true financial burden, likely to arrive when it is least convenient. When you add IRS penalties into the mix, though, your liability can mutate seemingly without end. If you haven’t done the math using an IRS penalty and interest calculator, you may be surprised to learn that your original debt amount can double in only four years.
IRS Penalty Types
An IRS tax penalty actually comes in two primary forms: failure to file and failure to pay. While IRS penalties and interest might be thought of as similar to charges you might see for a delinquent line of credit, there is a sharp distinction; government punitive charges can be extremely difficult to remove. Typically, you have to have a very good reason in order to get these fees waived.
Abatement Of Tax Penalties
After you’ve verified the numbers against the IRS penalty calculator, your next concern will likely be to get them removed. This adjustment, or IRS penalty abatement, can be applied for not paying taxes, or not filing, or both. In order to accomplish this, though, you must have a compelling and valid reason for not handling the issue that created the penalties to begin with.
For instance, you may have been dealing with the death of a loved one or a serious illness at the time your tax debt was assessed. In any event, it’s important to remember that IRS interest and penalties are not the same thing. While penalties may ultimately be waived, you’ll will be held responsible for paying the interest that has built on the tax debt until it is paid in full.
IRS Interest and Penalty Calculator
When attempting to determine the correct amount of penalties and interest, you can verify the most current rates by visiting IRS.gov. You will also find other helpful information there related to additional IRS charges including the consequences of filing taxes late along with your rights as a taxpayer. If, on the other hand, your concern involves payroll tax penalties, you may consult the site’s pages on small business tax responsibilities.
What to Do About Penalties
Regardless if you’re dealing with penalties for not filing taxes or penalties for not paying taxes, you owe it to yourself – and your finances – to do everything in your power to get them reduced or abated. Your first instinct may be to contact the IRS directly, as you would with any other collection agency. But the IRS is unlike any other collection agency.
Given the potential complexities around resolving a tax debt and attempting to get penalties removed, your best course of action may be to consult with a professional tax resolution company. This type of organization, such as Tax Defense Network, LLC, can provide you with a no-cost consultation and houses licensed tax professionals who may be able to help. Remember, it’s important to make your argument against the IRS case as compelling as you can the first time around. A seasoned tax professional can prepare this argument for you and execute it on your behalf directly with the IRS.