Penalty Abatement Basics
A tax debt can be an unwelcome and overwhelming financial strain, often leading to sleepless nights and worries of IRS action. While you’re right to be concerned, it’s critical to remain focused on resolving the issue and fast; penalties and interest are accruing and they’re driving up your balance. If you intend to dispute additional IRS charges, you can submit IRS penalty abatement form 843 and hope for the best.
Before you do that, though, it’s important to understand that there are intangibles at play when the IRS considers approving a tax or underpayment penalty abatement (and, perhaps, a more effective way to proceed). Your eligibility for penalty relief will be contingent on mitigating circumstances which may justify your lapse in payment. So before you start calculating your penalty for not paying taxes, think about the best possible way to actually achieve your overall goal.
IRS Penalty Abatement Avoidances
Although you may be ready to jump right in and submit your IRS penalty abatement form, there are some approaches to avoid. First, the IRS will typically grant a penalty abatement only for individuals who provide an acceptable reason for not paying or not filing their taxes – whatever the trigger for the penalties to begin with. Justifiable circumstances do not include lack of funds.
You may very well have been unable to pay your tax liability, but this reason alone will not secure a penalty abatement. However, if you were unable to satisfy your tax balance because your money was going to the care of an ill family member, for instance, the IRS may grant you a reprieve from the associated penalties. There are a variety of extenuating circumstances which the IRS may deem valid when considering your request.
Approving a Penalty Abatement, Other Charges
While you want to ultimately avoid a penalty for paying taxes late, there are a few other things to keep in mind. Although your IRS tax penalties may be abated, interest accrued from the unpaid debt will typically not be adjusted. Also, receiving a credit or modification to the tax debt itself is unlikely, unless you qualify for a settlement offer such as an Offer in Compromise. You will want to check your eligibility for such a program, but keep in mind that the requirements can be stringent.
Plan of Action Before Submitting Your Penalty Abatement Form
While you can opt to make contact directly with the IRS to request an abatement for your income tax penalty, this may not be the most effective course of action. For starters, you can expect long hold times if you need questions answered by an IRS agent. Second, when you fill out IRS penalty abatement form 843, you have to make sure that you do so completely and accurately the first time (you certainly don’t want to have to make repeated attempts).
You may wish to seek the assistance of a licensed tax professional. Such an individual, often affiliated with a tax relief company, can determine how best to make an argument with the IRS to ensure the highest probability of success for your penalty abatement. Tax Defense Network, LLC, has licensed tax professionals who can work with the IRS on your behalf to achieve such a goal.