What is Penalty Abatement and How Does it Work?

Red and white three dimensional text reading "don't get penalized!"

Are you late filing or paying your taxes?

Are you concerned about penalties?

Has the IRS contacted you about late taxes?

If you answered yes to any of these questions, you are not alone.  Late filing or payment of taxes typically causes severe penalties from the IRS.  However, certain circumstances can cause the IRS to waive these fees – if the correct actions are taken. This is done through a process called Penalty Abatement. Penalty abatement is available for those in good standing with the IRS or those facing reasonable cause situations, and can significantly lower your tax liability.

Learn how penalty abatement works and how to work with the IRS to drop these penalties.

Key Insights We Will Discuss:

  1. What is penalty abatement?
  2. Who is eligible for penalty abatement?
  3. How does penalty abatement work?

What is IRS Penalty Abatement?

The IRS does not offer penalty abatement to everyone that falls behind when it comes to filing or making payments.  Under the First Time Penalty Abatement Policy, taxpayers who meet the following criteria will qualify for relief:

  • Have no tax penalties for three years prior to the year they receive the penalty
  • Have arranged or paid any taxes due
  • Have filed all required returns or extension form

Additionally, penalty abatement is offered to those who have suffered what the IRS calls a reasonable cause event.  This includes the death of a loved one, natural disasters, unavoidable absences such as rehab or prison, and incorrect tax advice from a tax professional.  All these instances require documentation to prove they happened.  So keep detailed records.

How Does Penalty Abatement Work?

Penalty abatement lowers your tax bill dramatically, and can be done in a straightforward process.  For most, calling the IRS can resolve their abatement issue and lower tax liability.  Many individuals calling for a first-time penalty abatement can have their penalties removed over the phone.  For those facing larger penalties, a written request will be required.

Contact a Tax Attorney

If the IRS has levied significant penalties for a late filing or payment, then it is imperative that you seek out help ASAP.  You may qualify for a penalty abatement.  Call Ayar Law at 800.571.7175 to receive free, no-obligation tax advice from a tax attorney.

Executive Summary

  • Options are available to remove penalties from your tax liability
  • Reasonable cause or a history of on-time filing and payment can help you receive a penalty abatement from the IRS
  • Contact Ayar Law to get free, no-obligation legal advice about your tax matter at 800.571.7175

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.