Penalty And Interest Abatement
What You Should Know
Reasons For Interest And Penalties
- Late filing: up to 25% of the unpaid taxes of the return
- Late payment: up to 25% of the unpaid taxes
- Late federal tax deposits: up to 15% of late deposits
The most common accuracy with related penalties are:
- Negligence penalty: up to 20% of the understated taxes
- Substantial understatement penalty: up to 20% of the understated taxes
Interest charges accrue for any amounts owed to the IRS. The interest-accrual period begins on the date that the return was due and runs until the taxes are paid.
IRS Reasonable Cause For Penalty Abatement
With penalties and interest charges, it doesn’t take long for the amounts you owe to the IRS to grow to seemingly insurmountable amounts. However, the IRS may forgive or reduce penalty charges for number of reasons. These “reasonable cause” exceptions include:
- Death or illness of the taxpayer or a close family member
- Unavoidable absence of the taxpayer (ex. prison)
- Destruction of the place of a taxpayer’s records through fire, casualty, natural disaster, or other disturbance
- Inability to obtain records
- Civil disturbance materially impairing ability to make payments (ex. divorce)
- Ignorance of the law
- Statutory exceptions or waivers
- Undue hardship
- Receiving incorrect information from a professional tax advisor
- The IRS provided bad advice directly to you
- Other reasons why you did not file or pay, but can demonstrate the exercise of “ordinary business care and prudence.”
First-Time Penalty Abatement Waiver
How We Can Help
IRS penalty abatements are granted after an examination into the unique reasons for failure to pay your taxes. These abatements are debt settlements justified by your individual financial issues. The factual nature of the inquiry requires the IRS to know more about your specific situation and less about the impersonal numbers like dates and amounts. The key is demonstrating that the taxpayer was up against mitigating circumstances which they could not control.
CuraDebt Tax uses a three-phase approach to solve tax issues. The first phase is investigation. After obtaining a stay on any enforcement, we collect all information and documentation necessary to obtain the best resolution on tax debt. Your current and projected financials are analyzed pursuant to IRS and/or State standards. A CuraDebt Tax professional will evaluate all statutes of limitations and determine whether you are eligible for any reasonable cause penalty abatements. All of these factors will be considered while formulating an individualized resolution strategy for your review.
