What Does Tax Abatement Mean?
What Caused Your Tax Liability?
Keep in mind though, the IRS will not abate general interest based on reasonable cause or the First Time Abatement Request. Interest must be charged by law and will continue to be charged, at a daily rate, until your tax liability is paid in full. Requesting a penalty abatement and getting it approved will quickly reduce the total amount due and any interest that is attached to the penalty only.
If you meet the standards for an administrative waiver or first-time abatement, it is for the failure to pay penalty, failure to file a tax return penalty, and failure to make an estimated tax penalty. The late filing penalty may also meet the reasons for relief if it is related to an S Corporation or Partnership. These penalties will fall under the request for a First Time Penalty Abatement. A first-time abatement request can be made over the phone or by writing a story to the IRS.
This waiver is the easiest to get approved based on the overall fact that it was your first time owing a tax balance or having a penalty. There are a few crucial factors for this waiver to be granted. First, you must not have had a requirement to file a return for 3 years prior. If you did then they must be filed before the request is made. You can’t have any penalties added to your account for the 3 tax years prior to the tax year in which you received the first penalty.
Valid Extension Filed
Tax Abatement and Reasonable Cause
What Is Considered A Reasonable Cause?
- Serious Illness
- Unavoidable absence
- Unable to obtain records
- Natural disaster or casualty
- Incorrect written
- Oral advice from the IRS
- Erroneous advice from a certified public accountant
- Tax preparer
Undue hardship or Ignorance of the law. Death, Serious Illness or unavoidable absence in the taxpayer’s immediate family may prove reason for late filing or late paying. Providing documents such as death certificate, medical records or leave of absence papers can help support your story. This also applies to a fire or natural disaster that happened in your area. If you are unable to obtain records, due to a situation outside of your control, such as a wildfire, hurricane or snow blizzard you may have reasonable cause.
Ignorance Of The Law
Most of the time when these natural disasters occur, they are reported by the news. Once it's reported on the news you will be able to pull an article for your area to show that you were affected. The IRS will look at the factors of what records were needed in order to ensure compliance. They will also look to see if those records could be obtained by other means. Ignorance of the law can be related to the fact that a taxpayer started a small business for the first time and was unaware of the requirements.
First Time Payment Penalty
Undue hardship is not so much of an excuse from filing your tax returns or extension late. You must also prove that the reason for the hardship is something beyond your control. A lack of funds is never a reason to request penalty relief because the tax that is assessed comes from income that you have already received.
If You Believe You Have Reasonable Cause
When the IRS is reviewing your request there are numerous questions that the they will look to have answered within your story
Some examples of these questions are:
What happened and when did it happen?
How did these factors affect your ability to file or pay the federal tax timely?
If the events were only for a closed period of time, what has been done after it ended for you to be compliant?
You must show that you have made all effort to bring your account current with filing your income taxes as well as made arrangements to pay the past due tax liability back. Having a well written story as well as supporting documents can only increase the chances of approval with the IRS.
What Is Form 843 and Why Do You Need It?
Omni Tax Help
If you do not know how to make this request, you can contact Omni Tax Help to discuss your reasons for the events that took place. With the help of a trained tax firm on your side, you can have a Power of Attorney assigned to your case to settle the outcome. It is not uncommon that the penalty relief request will be denied the first time it is requested. When this occurs, you have the right to Appeal the IRS’s decision. A Penalty AbatementAppeal is meant to be submitted within 60 days that the original denial notice was sent out. Having a Power of Attorney working your case gives you the comfort of knowing that the dealings with the Appeals officer can be done with confidence. There are many factors that help determine the eligibility to each reasonable cause criteria. A Power of Attorney and/or expert tax professional will make sure that they achieve the best possible outcome based on your personal situation.