IRS Penalty Abatement: Get Expert Help to Reduce Your Debt

The IRS has a long list of penalties that they may use to encourage taxpayer compliance. These penalties can pile up and substantially increase the debt for the taxpayer. The good news is that the IRS has the authority to lower or completely forgive the penalties and the interest associated with the penalty.

It isn’t an easy process and having an Enrolled Agent can make all the difference. Penalty abatement is one of our specialties at Books, Taxes and More.

Let’s explore the subject of penalties and how we can help in more detail.

Common IRS Penalties

The IRS assesses different types of penalties, but here are the ones most taxpayers encounter:

1. Failure to File Penalty

The IRS can impose a penalty of 5% of the unpaid taxes per month, up to a maximum of 25% on any taxpayer that does not file by the due date including extensions.

2. Failure to Pay Penalty

The IRS can impose an additional penalty if taxes are not paid on time regardless of when the return is filed. There is no extension to pay in the IRS rules. This penalty is 0.5% monthly penalty, which can grow to 25% of unpaid taxes.

3. Accuracy-Related Penalty

If a return has substantial errors or income is significantly underreported, the IRS may assess a penalty of 20% of the underpaid amount.

4. Estimated Tax Penalty

For those who are self-employed or don't have enough tax withheld during the year, penalties could be assessed for failure to pay one of the four mandated estimated payments throughout the year.

5. Trust Fund Recovery Penalty

The IRS takes the submission of monies withheld from employees’ paychecks very seriously. Failure to submit these withholdings can result in a 100% penalty for payroll taxes not remitted. This serious penalty applies to business owners or responsible parties, meaning anyone who could sign a check.

How to Get IRS Penalties Reduced or Removed

Penalties are not mandated like interest. In many cases, penalties can be reduced (abated) or eliminated entirely, especially if you have reasonable cause or meet other criteria. Here are the primary strategies we use at Books, Taxes & More:

1. First-Time Penalty Abatement (FTA)

If a taxpayer has been compliant for the last three years, First-Time Penalty Abatement is possible. This is commonly used for failure-to-file, and failure-to-pay penalties. In some cases, it can be used for other penalties under the right circumstances.

Requirements:

· All required returns have been filed by the due date including extension.

All taxes have been paid, or an installment agreement is in place.
There have been no penalties assessed in the previous three years.

2. Reasonable Cause Relief

There are times when life events prevent a taxpayer from filing or paying on time. These are significant events beyond the control of the taxpayer. In this case we can argue for relief for cause.

Common acceptable reasons include:

Serious illness or injury
Natural disasters
Death in the family
Inability to obtain necessary records
Relying on incorrect professional advice

We can help gather documentation and craft a compelling narrative that increases your chances of success.

3. Statutory Exceptions

Certain situations (like receiving incorrect written advice from the IRS) qualify for penalty removal by law. These are rare, but worth considering with expert guidance. Steve at BTM can help here.

4. Administrative Waivers

In specific situations—such as during natural disasters—the IRS may issue automatic penalty relief. Steve can check if you're eligible.

5. Appeals

If the penalty abatement request is denied, the taxpayer enjoys the right to appeal. We can prepare a strong case and represent you in front of the IRS.

Why Use Books Taxes & More?

Dealing with the IRS is stressful—and the language in their letters isn’t always user-friendly. Steve Perry can:

Analyze the penalty situation
Identify the best relief strategy
Draft and submit IRS correspondence on the taxpayer’s behalf
Negotiate payment plans or offers in compromise if needed
Save time, money, and peace of mind

Final Thoughts

IRS penalties can feel overwhelming, but it isn’t the end of the world. Whatever the situation, there are proven strategies to reduce penalties and move forward with life. The key is acting quickly and getting expert help from Books, Taxes & More.

If you're facing penalties and want to explore your options, call Steve at 678-717-9818 or email at steve@bookstaxesatl.com. It is amazing how much can be saved.

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IRS Penalty Abatement: Get Expert Help to Reduce Your Debt

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