IRS Penalty Waiver: How to Make Sure You Qualify
When you owe back taxes to the Internal Revenue Service (IRS), the idea of paying your actual debt plus a large sum in penalties and interest is very difficult to swallow. In some cases, however, you may qualify to have the penalties waived. Does this penalty waiver apply to you? Below are the circumstances that may help you determine if you qualify.
Penalty Relief Due to Reasonable Cause
The IRS can review certain facts and circumstances which may have impacted your ability to file your tax return. This most often relates to small businesses and those who are self-employed. Typical issues that are considered include:
- Natural disaster, casualty or fire
- Death, a serious injury or illness
- Other reason which shows that you used all ordinary business care to meet your tax obligations but were still unable to do so.
As you might expect, you’ll have to share information with the IRS about the situation that kept you from being able to pay your taxes and/or file your return. You will want to be ready to provide specific facts about the event and exactly why it impacted your ability to pay. You may be asked to share hospital records, court records, doctor’s letter, or documentation of a natural disaster or other devastating event. Also, keep in mind that even if you are able to qualify for an IRS penalty waiver, you will likely not be able to get the interest on your late payment waived. Interest is generally not waived for reasonable cause and accrues until your tax bill is paid in full.
Other IRS Penalty Waiver Policies
If you don’t qualify for a penalty waiver due to reasonable cause, you may want to see if one of these other situations applies to you:
- Statutory Exception: If you think that you have received incorrect written advice from the IRS and received a penalty as a result, you can request that the penalty be waived.
- First Time Penalty Abatement: It is possible that you may qualify for a penalty waiver under the IRS First Time Penalty Abatement policy. You must meet specific criteria including that you have no tax penalties for the 3 years before the penalty, you must be current on your required returns and you must have paid, or arranged to pay, any tax due.
- Innocent Spouse Relief: In some unique cases, a spouse may make the case that they are not equally responsible for taxes and penalties assessed during their marriage. This is most often applicable when one spouse is unaware of significant tax problems/debt. You can apply for equitable relief or separation of liability relief depending on your situation.
Get Tax Relief Help Today
If you think that you may qualify for a penalty waiver, you may want to partner with a reputable tax relief company who can help you make the best case to the IRS. Success Tax Relief helps many individuals just like you work with the IRS to solve a wide variety of issues, including penalty waivers. Call our team today at 877-825-1179 for more information. For a free consultation, schedule an appointment with us online.