Resolving IRS Penalties With Damiens Law

If your tax bill includes hundreds or thousands of dollars in penalties, you’ve likely thought that just getting rid of your penalties could make a significant dent in your tax debt. At Damiens Law, we help taxpayers like you fight for penalty relief that can make your tax debt a little easier to tackle.

Key Takeaways

• Some of the main penalties assessed by the IRS include failure-to-file, failure-to-pay, and accuracy-related penalties.
• The IRS offers first-time penalty abatement for taxpayers with at least three years of tax compliance without any penalties.
• Another option is reasonable cause penalty abatement for those who have a valid reason for falling behind.
• You can appeal the IRS’s decision if they deny your penalty abatement request.

Types of IRS Penalties

IRS penalties depend on the type of tax law violation, how long the problem has gone unresolved, and other penalties that may be accruing at the same time. Some of the most common tax penalties assessed by the IRS include:

Your Guide to Removing Penalties

Resolving IRS penalties may seem overwhelming, particularly if you have multiple types of penalties or they stretch across multiple years. Here’s how we approach penalty relief:

• Become compliant: First, do whatever you can to stop the penalties from continuing to accrue. If you have unfiled tax returns, get caught up. If you have an accuracy-related penalty, take steps to ensure that your documentation is accurate moving forward. If you have unpaid tax debt, look into payment options that can minimize your penalties as you pay down your debt.
• Determine eligibility for penalty relief: You may qualify for first-time penalty abatement if you have had no penalties within the past three years and your returns are current. This is essentially a free pass for those with a history of compliance and are unlikely to accrue additional penalties in the future. You may qualify for reasonable cause penalty relief if your noncompliance was due to a serious illness, death in the family, natural disaster, or other serious issue that caused you to fall behind.
• Gather documentation: If you are requesting reasonable cause penalty relief, be ready to prove the hardship that caused you to fall behind. This may include court papers, medical records, or death certificates, depending on the circumstances. If you’ve attempted to set up payment options and resolve your tax debt with the IRS, get copies of everything to prove that you have been working in good faith to comply with IRS requirements.
• Submit a request to the IRS: You can request penalty relief over the phone if you choose. The IRS will ask for information regarding your penalties and documentation, and at the end of the call, they will give you their decision. There are some cases that cannot be handled over the phone, and in that case, they will direct you to file via Form 843. Even if your case can be handled over the phone, you can still apply by filing Form 843 if you choose. 

What to Expect If You Qualify for Penalty Abatement

Penalty removal can substantially reduce what you owe – especially if you’re dealing with a penalty based on your tax liability that’s maxed out. For example, both the failure to file and pay penalties can each get up to 25% of your tax liability. 

Additionally, the IRS removes the interest that has accrued on those penalties. Normally, the IRS only removes interest in extremely rare situations, but in this case, the interest removal is automatic. That too helps to reduce your balance. 

Once the penalties have been removed, you should try to stay compliant with your tax obligations moving forward. If you’ve set up payments, make sure to stay on top of them monthly. If you’ve paid in full, avoid penalties by filing and paying on time in the future. 

Appeal Options If Abatement is Denied

If your penalty relief request is approved, the IRS will remove the penalties in question and all accrued interest associated with the penalties. But if your request is denied, you still have options. You can request an IRS Independent Office of Appeals conference or hearing.

There is a strict deadline on this request. You typically have just 30 days from the date of your rejection letter to submit your request. You can file an appeal if you meet these requirements:

• You received a letter that the IRS assessed a failure-to-file or failure-to-pay penalty
• You asked them to remove the penalty
• The IRS denied your request, and you received a letter stating that

To make your appeal as strong as possible, be ready to show any other information or extenuating circumstances that may lead to a different decision. This is one area where having a tax attorney can help; they can look at your initial request, identify potential weaknesses, and help make your appeal stronger.

The Role of a Tax Attorney

A tax attorney is an invaluable resource when you are trying to resolve IRS penalties. At Damiens Law, we help our clients craft strong, reasonable cause arguments, handle all communication with the IRS on behalf of our clients, navigate the appeal process after a denied request, and negotiate with the IRS directly to set up a fair payment plan.

With the help of an experienced tax attorney, you have a stronger chance of securing penalty relief and protecting your financial future.

How to Avoid IRS Penalties in the Future

Once you’ve addressed your current penalty situation, it’s important to set up systems and tools that can help you avoid falling back into this habit. We recommend:

• Setting up calendar reminders so you remember key tax deadlines and avoid preventable penalties
• Adjust your withholding if you did not have enough taken from paychecks and were hit with an underpayment penalty
• Adjust your estimated payments if you are self-employed or have to make quarterly payments
• Retain a tax professional to help you stay compliant and caught up year-round
• Communicate with the IRS or your tax professional from the very beginning if you run into tax issues

If you’re facing tax penalties, Damiens Law is here to help. We know tax problems place a heavy weight on your shoulders, and we’re here to assist you in finding relief. Our extensive experience in penalty abatement, IRS appeals, and tax negotiations make us the right choice for your tax situation. Call us at 601-873-6510 or reach out online to claim your no-obligation consultation.

Frequently Asked Questions

How do I get my IRS penalty removed?

You can send Form 843 and supporting documentation to the IRS. In some cases, you can also apply over the phone.

I forgot about the tax deadline; will they waive my penalties?

You may if you have three years of tax compliance behind you with no penalties. However, you would likely not qualify for reasonable cause penalty abatement; forgetting tax deadlines isn’t considered a valid reason.

Can I apply over the phone?

Many taxpayers can apply over the phone and get an immediate response.

My request was denied—now what?

You can appeal the decision with the Independent Office of Appeals.

Sources:

https://www.irs.gov/payments/penalty-relief
https://www.irs.gov/forms-pubs/about-form-843
https://www.irs.gov/pub/irs-pdf/f843.pdf
https://www.irs.gov/appeals/penalty-appeal
https://www.irs.gov/payments/penalty-relief-for-reasonable-cause
https://www.irs.gov/payments/penalty-relief-due-to-statutory-exception
https://www.irs.gov/payments/failure-to-pay-penalty
https://www.irs.gov/payments/failure-to-file-penalty
https://www.irs.gov/payments/accuracy-related-penalty
https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty
https://www.irs.gov/payments/dishonored-check-or-other-form-of-payment-penalty