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Any taxpayer may qualify for relief from penalties if they made an effort to comply with the requirements of the law but were unable to meet their tax obligations due to circumstances beyond their control.

The Internal Revenue Service (IRS) does not abate interest either for reasonable cause or as first-time relief. The IRS charges interest by law and will continue to charge interest until a taxpayer’s account is paid in full. However, if any of a taxpayer’s penalties are reduced, then the IRS automatically reduces any interest related to these penalties.

A lack of funds does not constitute reasonable cause for any failure to file or pay taxes in a timely fashion. However, the underlying reasons for the lack of funds may meet reasonable cause criteria for any failure-to-pay penalties.

Penalties Eligible for Relief

Penalties eligible for penalty relief include:

  • Failing to file a tax return;
  • Failing to pay on time;
  • Failing to deposit certain taxes as required; and
  • Other penalties as applicable.

Taxpayers who have received a notice should review the information contained in the notice to verify its accuracy and correctness. If an issue in the notice can be resolved, a penalty may not be applicable.

Types of Penalty Relief

The following types of penalty relief are offered by the IRS:

  • Reasonable Cause – this is based on all the facts and circumstances of a taxpayer’s situation.
  • Administrative Waiver and First Time Penalty Abatement – The IRS may provide administrative relief to a taxpayer that may apply under its First Time Penalty Abatement policy. Taxpayers may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or deposit taxes when due under the IRS First Time Penalty Abatement policy.
  • Statutory Exception – A provision of the Internal Revenue Code or other legislation may provide an exception to a penalty.

Contact a tax attorney if you are facing an IRS audit or have been assessed tax fraud penalties. Get help by calling The Gartzman Law Firm at (770) 939-7710. You can also use our contact form to arrange a free consultation today.