How to Reduce Your Payroll Tax Penalties

payroll tax penalty

Failure to submit payroll taxes to the IRS can result in penalties against you and your business.  If you have a valid reason as to why the taxes were not paid, the federal agency may consider waiving or reducing your penalties.  With the guidance of your tax attorney, you can try to get your penalties abated.  There are a few different ways to go about this: by showing reasonable cause for why the taxes weren’t submitted; by proving you didn’t pay taxes due to erroneous advice from a tax professional; or by paying the owed taxes.

Key Insights We Will Discuss

  • What qualifies as a reasonable cause?
  • What is a correction of service error?
  • Why paying your taxes is necessary to get penalties abated

Executive Summary:

  • If you can show reasonable cause as to why you did not submit payroll taxes, the IRS may grant you a waiver
  • You can request a penalty abatement if you have unpaid payroll taxes due to bad advice from a tax professional
  • It is important to pay off your tax debt and penalties before asking the IRS for a waiver
  • Contact Ayar Law to get free, no-obligation legal advice at 800.571.7175

Show Reasonable Cause to the IRS

One way to get penalties waived or reduced is to work with your tax attorney to prove that there were circumstances beyond your control that prevented you from paying the owed taxes.  This may include a serious illness, a death in the family, or an interruption of business due to a fire or natural disaster.  To show reasonable cause, you and your attorney will have to submit a letter to the IRS requesting a penalty abatement.  In the letter, you will need to explain the circumstances that prevented you from paying the taxes, any unsuccessful attempts you made to submit the taxes, and how quickly you took action once the circumstances were resolved.

Correction of Service Errors

Another option to try to get your penalties abated or reduced is to show that you followed erroneous advice from a qualified tax professional.  In this situation, you will need to work with a tax attorney to write a letter to the IRS explaining the advice the tax professional gave you and include documentation of the guidance he or she provided.  If the tax professional gave advice over the phone or in-person, then you must provide proof of the call or notes from the conversation.

Pay the Taxes Owed

Your tax attorney may advise you to pay your owed taxes and any financial penalties the IRS assessed before requesting a penalty abatement.  This will show good faith to the federal agency

Contact a Tax Attorney

If you owe back payroll taxes, call Ayar Law at 800.571.7175 to receive free, no-obligation tax advice from an experienced tax attorney.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.