One of the goals we have at Legal Tax Defense when we represent a taxpayer before the IRS is to have their IRS tax penalties removed or reduced. It is possible to have IRS tax penalties reduced or removed, and the IRS has published guidance in its regulations for its own employees to follow about tax penalty abatement. You should know what these regulations say about tax penalty abatement.
First, the IRS representatives want to know the taxpayer’s reason and that reason should show a reasonable cause.
The IRS representatives also want to know that the taxpayer had a history of compliance with the IRS before the incidents that caused a penalty to be imposed. If the taxpayer has a history of the same penalty in previous years, the IRS agent could be skeptical that there is a reasonable cause.
IRS agents are told to consider first-time reasonable causes for penalty abatement, but a first-time reasonable cause does not mean penalties will be reduced or eliminated.
IRS agents will also consider whether the event that caused a penalty to be imposed was an event that was out of their control. A death, serious illness, or a widespread problem such as Covid pandemic shutdowns and a job loss could be events that could lead to penalties that could be reduced or eliminated.
The IRS regulations that its agents follow specifically mention death, serious illness, or unavoidable absence as reasons that should be taken under consideration for removing or reducing penalties.
For individuals, the IRS instructs its representatives to consider penalty abatement with this paragraph:
“If there was a death, serious illness, or unavoidable absence of the taxpayer or a death or serious illness in the taxpayer’s immediate family (i.e., spouse, sibling, parents, grandparents, children).”
Death or serious illness can also be expanded as a reason for reducing penalties if the taxpayer had the sole authority or file a tax return, make payments, or make deposits for corporations, estates, trusts, and other legal entities.
Can You Present Your Case to The IRS By Yourself?
Can you present your case for reducing IRS tax penalties to the IRS by yourself? Yes, you can. The IRS regulations give you the right to do it. But the IRS regulations also allow you to have a representative to present your case to the IRS. We can discuss that with you when you call us for a free telephone consultation.
In many cases, taxpayers with a problem with the IRS can handle their own issues. But there comes a time and a cost when you might be better off with expert representation. We can discuss those options with you.
There are payment plans with the IRS that are very appropriate for taxpayers who owe smaller amounts of money to the IRS. But if your tax debt is high, or if your financial situation has changed so you can’t handle a tax debt on your own, our free telephone consultation can include information about seeking an IRS Fresh Start Program or an IRS Offer In Compromise program. And yes, we’ll also include having IRS tax penalties removed or reduced.