IRS Penalties & Interest

Removal of Penalty and Interest
Reasonable Cause

IRS charges interest and penalties for any outstanding taxes as wells as for late filing, valuation overstatements or understatements and substantial understatement of the tax due. The combined charges for interest and penalties often may be much greater than the original tax debt.

However, the law allows us to remove or reduce a penalty based on “reasonable cause.” To request a penalty reduction, we prepare a detailed report of circumstances, facts and other supporting evidence to convince the IRS that the charges for penalties should be abated. The requests for abatement must be made under a penalty of perjury.

Circumstances where IRS will remove the penalty charges may include:

You relied on IRS’ written advice concerning your tax situation which resulted in the penalty.

Death or serious health condition suffered by a family member
Mental or Physical illness
Drug or related dependency problems
Reliance on a bad accountant or a tax advisor
Extended military service

There are numerous other circumstances which may result in removal of the penalty and the outcome of each case can vary depending upon how your case is argued. Keep in mind that proper documentation and detailed description of the basis to prove “reasonable cause” is the key to having the penalties removed.

In addition, IRS may also remove or reduce interest charges due to errors by the IRS’ ministerial act, based on the facts and circumstances of each case.