In our last blog, we discussed IRS Penalty abatement using the First Time Abatement option. Today, we will talk about getting your penalty abated using Reasonable Cause to resolve the issue. Tax Penalties are a common issue for taxpayers that come to our Richardson TX office to discuss tax problems. Penalties can double your tax debt (or more) over time. The IRS does not simply remove penalties upon request. It is the government’s position that penalties serve as a valuable tool in compliance. However, you may be able to remove penalties using Reasonable Cause if you qualify.
How Do I Qualify Using Reasonable Causes Abatement?
To qualify for reasonable cause, the taxpayer must be able to show that they attempted comply with the IRS requirements, but were unable, due to reasons beyond their control. Some common examples of reasonable cause that the IRS’s website lists include –
- Fire, casualty, natural disaster or other disturbances.
- Inability to obtain records.
- Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family.
- Other reason which establishes that you used ordinary care and prudence to meet your Federal tax obligations but were nevertheless unable to do so.
The important factor is to be able to prove that reason for non-compliance was beyond your control. In most cases, you will be required to provide documentation that supports your claim.
How Do I Request Reasonable Cause Relief?
To request relief, call the 1-800-829-1040 or the number on your notice. In the case of reasonable cause, the IRS will likely request you to mail or fax written statements to support your claim . If the IRS does not accept your request for a reasonable cause penalty abatement, and you believe the denial was in error, appeal the decision. You can appeal once you receive your Notice of Disallowance from the IRS either on writing or using the IRS’s online tool.
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