If you are experienced enough, the best feeling in the world is not your favorite food or to be with a person you love. It is the feeling of having filed and paid taxes on time. This is the only way to be sure that the IRS won’t be knocking on your door in the future. Else, the whole ride could be very bumpy. From serving notices to claiming lien on property, the IRS fury comes in many ways.
The most common of these is obviously the range of penalties it may impose. From late payments to deliberately providing wrong information, penalties may be imposed on many matters. You may even face penalties on late filing. Though not possible in each case, tax penalties may be abated in certain cases.
Tax Penalties Abatement in Tustin, CA – Important Things You Must Know
Penalty When Getting a Refund
The first thing you need to know is that you won’t probably be liable for a penalty when expecting a refund. The IRS wants to go after those who need to pay but haven’t paid taxes.
Failure to pay taxes is obviously off the table in such a scenario. However, there may still be a penalty for late filing. But this is waived off in many cases. But this should not encourage you to avoid filing returns. Moreover, the sooner you pay, the earlier you may get your refund.
Since everyone is not lucky enough to get a refund, here are other things you need to know about abatement.
Abatement When Acting on Wrong IRS Advice
Many individuals rely on IRS advice since they are unaware of tax rules and cannot afford a tax attorney. In some cases, it is possible that the IRS unintentionally provided the wrong advice.
This builds a strong case if you acted on such an advice and later got served with a penalty. But you need to prove your case for such abatement.
You may need to provide documentary evidence of you seeking advice and the wrong advice provided to you.
First Time Penalty Abatement
You may be eligible for such abatement in the following two cases.
- It is the first time that you are filing tax returns.
- You did not receive any penalty during the last three years
In either of the cases, you must have filed current returns on time or got an extension. It is better to pay taxes straightaway without waiting for penalty waiver. It is because waiting to get a decision on waiver may delay your payment, and, hence, failure-to-pay penalty.
While the IRS may automatically impose penalties, you may be able to claim abatement on statutory exceptions grounds. Examples may include combat zone relief or disaster relief.
This is the most common case of getting an IRS tax penalty. If you have a genuine case that you couldn’t meet the deadline due to circumstances, the IRS may be kind. All you need to do is to prove that unavoidable circumstances delayed your filing or payment.
While all inabilities don’t count as a reasonable cause, the most common examples of reasonable causes are as follows.
- Natural disasters, such as hurricanes or floods.
- Inability to gather relevant tax records, despite your best efforts.
- Death or serious illness of a family member.
- Serious illness on your own part.
- Unavoidable absence of a taxpayer.
- Erroneous guidance/ glitch of tax software.
Remember that, in either case, you still need to prove that otherwise you take due care in managing your tax affairs.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.