Disputing IRS Penalties in Today's Environment

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It is important for taxpayers to exercise their rights and dispute IRS penalties when they are unjustified. Currently, the IRS is way behind on processing tax returns and other documents sent by taxpayers. To a certain degree this is normal for the IRS, but it has been exacerbated by the pandemic. There are far more taxpayers with problems and less staff at IRS facilities. Many IRS staff are still working from home. Taxpayers are being mailed notices assessing penalties and interest and a demand for payment.


Many of these notices lack merit, but individuals and businesses often do not know what to do. The IRS is a labyrinth and it is easy to get lost. Taxpayers calling the IRS hotlines are having difficulty getting through to a live agent to address their problems. If they do get through, an agent may or may not be helpful or even understand the issue at hand. There are great IRS agents out there manning the phone lines so be thankful if you get one of them.


Regardless, penalties and interest can be abated in part or in full depending on the facts and circumstances. The costs can be significant for older penalties and interest accruing for years. These can close to double the total bill due to the IRS. If you believe that you have been assessed a penalty incorrectly or unfairly, you should dispute the issue. Do not just accept a penalty because the government has dictated it. Sometimes they are wrong. They are wrong a lot. If you have justification, you can win. The IRS is supposed to impose and collect the correct tax, no more and no less, but sometimes you have to butt heads with them to get a fair outcome.


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Posted by

Howard Richardson

Enrolled Agent

IRS and State Tax Representation

(213) 545-1799



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