First-Time Tax Offender? See if You Can Benefit From an IRS Penalty Waiver

First-Time Tax Offender

by Harry Galstian

June 9, 2016

What Is an IRS Penalty Waiver (aka Penalty Abatement)?

An IRS penalty waiver does exactly what it sounds like – waives IRS penalties. For an individual filer, this procedure attacks failure-to-file or failure-to-pay penalties. For a business, these penalties also include those related to a failure to properly deposit payroll taxes. Pursuing this type of waiver is one step in the process of reducing or eliminating tax debt.

Who Can Qualify?

To qualify, you should meet these criteria:

  • You must be up-to-date on all tax filings or have filed a current tax extension.
  • You have not faced a large penalty from the IRS in the last three years (a small penalty may not exclude you).
  • You have paid or are in the process of paying any taxes.
  • You have “Reasonable Cause” for not paying or filing late. With all things related to the IRS, exceptions can be made. Not sure if you qualify? Speaking with a tax resolution professional can help shed some light on the process.

What is “Reasonable Cause”?

Usually, when filing an IRS penalty waiver, you’ll want to have a good reason for your failure to file, deposit or pay. There are many reasonable explanations for this type of delinquency. For example, a slump in business could make depositing payroll taxes impossible, or a health issue could leave you unable to file or pay on time.

A trusted tax resolution service can help with the necessary paperwork and the success of the application process (and any necessary appeals).

How Else Does an IRS Penalty Waiver Help?

As discussed, a penalty abatement absolves administrative penalties incurred by qualifying taxpayers. But did you know that it can reduce or remove any interest charged on an IRS penalty? That can mean big savings toward your tax debt. And keep in mind, even if you don’t qualify for this type of waiver, contact Direct Tax Relief as there may be other IRS tax debt resolution options available to you. Learn why our A+ rating with the Better Business Bureau matters.

IRS Penalty Waiver: