IRS Penalty Abatement Help

IRS Penalty Abatement Help | Reduce IRS Penalties & Lower Your Tax Debt

Dealing with your tax debt is stressful enough. But IRS penalties usually make up a significant portion of your total balance. The longer you wait to pay, the more penalties you’ll accrue, making your balance grow substantially.

Fortunately, the IRS can remove or reduce many types of tax penalties if you request abatement and meet the qualification criteria. That can be a huge relief, especially when you can’t afford your tax debt.

Damiens Law approaches penalty relief strategically, and we can help you understand your options for tax relief. Contact our offices in Mississippi or Tennessee, and remember that we serve clients across the nation. 

You’re in the Right Place If… 

Wondering if you need penalty abatement or refund services? The answer is yes if you’re dealing with any of the following:

• IRS penalties have increased your total tax debt.
• Your balance continues growing due to penalties and interest.
• You can’t afford a monthly IRS payment plan.
• You were penalized for late filing or payment.
• You don’t know about your penalty relief options.
• You want to reduce your tax balance.
• You had reasonable cause for incurring the penalties.
• The IRS applied penalties incorrectly to your account.
• You received penalties due to incorrect written advice from the IRS.

Not sure if penalty abatement is right for you? Reach out for a consultation, and we’ll start with a conversation. 

What Is IRS Penalty Abatement?

The IRS issues penalties when taxpayers miss a payment, miss a filing deadline, or make some other errors when filing their taxes. For some types of penalties, the IRS offers penalty abatement, which will remove or reduce these penalties. 

Damiens Law helps clients determine eligibility and the types of relief available. Not all relief requires financial hardship or a reasonable case; you may qualify with a history of good tax compliance.

Which Penalties Qualify for Abatement?

IRS penalty abatement generally applies to these penalties:

• Failure to file: When you miss the tax return deadline
• Failure to pay: When you miss the deadline for paying your balance
• Failure to deposit: When a business doesn’t deposit on time

However, an experienced attorney may also be able to help you get relief from failure to file information return penalties and audit-related penalties, such as fraud or accuracy penalties. 

Note that interest is charged on top of these penalties. If your penalty is removed or reduced, the interest tied to that penalty will also be removed or reduced.

Tax Penalties We Help With

Being charged with tax penalties can feel hopeless. Whatever type of penalty you’re facing, Damiens Law can help. We regularly help taxpayers deal with IRS penalties for the following:

• Unfiled tax returns: As soon as you miss a filing deadline, the IRS will send a notice and charge the failure to file penalty.
• Late payments or deposits: The failure to pay or failure to deposit penalties apply if individuals or businesses miss their payment deadlines.
• Reasonable cause cases: The IRS may waive penalties if you missed a deadline because of a valid reason, such as a natural disaster, death, or system issue.
• First-time tax penalties: First-time penalty abatement may apply if you haven’t received the same type of penalty over the last three years and are up to date on your other tax requirements.
• 401k early withdrawals: Withdrawing early from a retirement plan usually requires an additional 10% payment, but some exceptions apply to avoid this fee.
• Missed estimated tax payments: Failing to pay estimated tax on time, or not paying enough, can result in an IRS penalty that could qualify for abatement.

Tax notices and tax penalties can cause immense stress. Our legal team at Damiens Law gets to the bottom of your tax issue and starts pursuing a resolution right away.

Risks of Ignoring IRS Penalties

Because tax debt and penalties can be so overwhelming, many taxpayers may do nothing when they get an IRS notice in the mail. However, ignoring penalties is never a good idea. Here’s what will happen if you don’t act quickly:

• Penalties will increase with additional charges and compounding interest.
• A higher tax balance means higher monthly payments in a payment plan.
• You may not be eligible for some payment plans due to how high the penalties make your total due.
• You could unnecessarily pay thousands more than your original balance.
• The outstanding tax debt may cause long-term financial strain.
• You may get into more legal trouble with the IRS.
• The longer you wait, the fewer options and less flexibility you’ll have for resolution.

The good news is that our team is experienced in handling even the most complex tax penalty situations. Reach out to us for a consultation right away.

How Our Firm Handles IRS Penalty Abatement

When you engage us to help with your IRS penalties, we use a multi-step process designed to get results. Here’s an overview of the Damiens Law Process:

• Review documentation: We pull your IRS transcripts and assess your full compliance history to better understand your situation.
• Identify options: We go over the types of penalties you have, refund eligibility, and resolution paths.
• Determine the approach: Our attorney guides you on which type of relief to apply for or how to pursue another resolution method.
• Prepare requests: We’ll help you send your request or application and prepare other documentation as needed.
• Communicate directly with the IRS: We work with the IRS on your behalf.
• Resolve your penalties: The end goal is to get you relief from your penalties. 

Our legal services are personalized to meet your needs.

Real Case: Penalty Abatement Reduced Payments

A Damiens Law client had over $20,000 in tax debt with the IRS. Unfortunately, that equaled a monthly payment amount of $715, which was unaffordable. Penalties made up a large portion of that balance. 

Our firm identified that the taxpayer was eligible for first-time penalty abatement, since they had a good history of tax compliance over the last three years. Just by getting the penalties abated, the balance dropped to $8,700, which lowered the monthly payment to just $300.

Not only did this client save money, but they also avoided defaulting on their installment agreement and maintained compliance.

This example shows just how much penalty abatement can reduce monthly payments and overall tax debt.

How Penalty Abatement Fits Into Tax Resolution Strategies

IRS penalty abatement is just one part of the tax resolution strategy – if that’s all you need, that’s fine. In fact, many clients come to us for help getting penalty refunds for balances they’ve already paid, but even more often, clients need help with resolving the rest of their tax debt. 

Main options include:

• IRS Installment agreements: monthly payments
• Offer in compromise: tax settlements
• Currently not collectible: collection pauses

If the tax debt is due to your spouse or former spouse, we can also look into innocent spouse relief. We also help clients dealing with audits and appeals.

The faster you act, the better the outcome will be. This is how our attorneys approach penalty abatement — as part of a holistic strategy to get you back on track for continuous tax compliance.

When to Hire a Tax Attorney for Penalty Relief

The IRS may automatically waive or reduce late penalties if it’s your first penalty. In this case, you may not need to hire an attorney, especially if your balance is low and you can afford to pay it off. 

However, penalties can quickly create more complex issues. Hire legal help for penalty relief if:

• Penalties make up a large portion of your tax debt.
• You want to set up a payment plan or modify an existing plan.
• The IRS has denied your abatement request.
• You want to address your entire tax strategy and liability.

In these cases, it’s never a bad idea to work with an experienced attorney, and always a good idea to work with Damiens Law.

Work With Damiens Law for Penalty Relief

When you decide you need a tax attorney for IRS penalty relief, hire the team at Damiens Law. These are just a few good reasons to hire us:

• Tax attorneys with IRS negotiation experience
• Proven ability to reduce balances and payments
• Strategic approach to reviewing and combining solutions
• Experience with both individuals and businesses
• Offices in Mississippi and Tennessee, but serving nationwide
• Focus on long-term resolution, not quick fixes

If you have questions about an IRS notice or your penalty balance, contact Damiens Law to set up a consultation now.

FAQs About IRS Penalty Relief

How does IRS penalty abatement work? 

The IRS may waive or reduce certain penalties if you miss a tax deadline, such as failing to file or pay on time. The most common type of penalty abatement is an administrative waiver, known as first-time penalty abatement. You may also qualify for reasonable cause abatement.

Do I qualify for first-time penalty abatement?

Eligible taxpayers need to have a history of good tax compliance, meaning they haven’t received IRS tax penalties in the last three years or fewer if they haven’t had a filing requirement for that long.

Can penalties and interest both be removed?

Yes, the IRS will automatically remove or reduce interest tied to penalties that are being removed or reduced. But in general, the IRS doesn’t waive interest unless it was applied in error. 

How long does penalty abatement take?

With first-time abatement, the IRS makes the decision about your eligibility immediately, and sometimes automatically. Penalties should be removed right away, and you’ll get a letter in the mail as confirmation. With reasonable cause, the IRS may ask you for information confirming your situation, which could take longer.

What is reasonable cause for penalty relief?

The IRS states that you may qualify if you “demonstrate that you exercised ordinary care and prudence and were nevertheless unable to file your return or pay your taxes on time.” Examples of reasons that the agency will accept include natural disasters, fires, serious illness, death, system issues, or an inability to obtain your records.

What if my penalty abatement request is denied?

You can usually appeal the IRS’s denial if you believe you are eligible. You have 30 days from the rejection letter date to file your appeal request.

Can I request penalty abatement more than once?

Yes. You can qualify for first-time penalty abatement even if you’ve received it in the past. The lookback period is three years, so if you haven’t received a penalty during that time, you can request it again. Reasonable cause may also be requested again if you qualify.

Sources:
https://www.irs.gov/payments/penalty-relief-for-reasonable-cause
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
https://www.irs.gov/payments/administrative-penalty-relief
https://www.hrblock.com/tax-center/irs/audits-and-tax-notices/how-long-does-it-take-irs-penalty-abatement/
https://www.irs.gov/appeals/penalty-appeal