Facts about Penalty Abatement

One of the most common forms of federal tax debt relief is penalty abatement. Learn more about this option to determine if it's right for you.

About Penalty Abatement

If you have tax debts, you're probably well aware that the IRS assesses penalties and late fees very quickly. Even though the interest rates are usually reasonable, the interest still accrues at a substantial rate, adding to your total tax liability and making your debt harder to repay. Penalty abatement is a form of federal tax debt relief that allows you to dispute penalties and interest for a specified period of time. This form of tax debt relief is ideal for those with large amounts of back taxes for which the current balance is much higher than the original balance.

Valid Reasons for Penalty Abatement

You may pursue penalty abatement as a form of federal tax debt relief for several reasons:

1. Reasonable cause. If you were not completely aware of the tax law code, have a serious illness, had a death in the family, or were unable to file, you would qualify for penalty abatement federal tax debt relief.
2. Administrative waivers. This reason covers unfortunate hardships, such as a natural disaster, first-time filing, mental diagnoses, lost or destroyed financial records, fixed income, bad advice from a tax professional, extended unemployment, or drug/alcohol problems.
3. IRS error. This reason applies if the IRS gave you bad advice on how to file your taxes or made a mistake in processing your claim.

More on Penalty Abatement

As with all forms of federal tax debt relief, it can be an incredible hassle to try to request penalty abatement from the IRS on your own. Effective federal tax debt relief requires familiarity with the tax laws and experience in dealing with the IRS. Thus, when looking into penalty abatement or other forms of federal tax debt relief, you are almost always better off enlisting professional help.