Things The IRS Will Not Tell You About Tax Penalties

If you owe back taxes, you have most certainly accrued penalties and interest. While the IRS never abates interest, unless they have made an error, they do on occasion abate penalties. When you call, they will not tell you this is even a possibility.

If you just owe for one year and you have filed your prior years on time and the penalties are not too high (they wont give you the ceiling), you can ask to have the penalties abated and they may do so.

Even if you owe for several years, if you can show reasonable cause, they may abate the penalties. Reasonable has to be something major like a death in the family, drug or alcohol addition, other other major life altering disaster.

The key is, you have to be able to show that this event affected your entire life, not just whether or not you filed and/or paid your taxes. If you lost your job, your family or had a tragedy that prevented you from doing every day tasks, you need to write a letter to the IRS with a description of what occurred and submit documents to substantiate this.

If you need assistance, contact an Enrolled Agent or other tax professional to help you write the letter.