The term “penalty abatement” is used to describe the process of reducing or removing penalties from a tax bill. It is an important aspect of any tax resolution case because the constant accrual of penalties can make it feel like you are never going to get out from under the IRS or other tax agency. At Spaulding Legal, APC we take the time to understand your situation and explore every option available to eliminate the burden of tax penalties. Our goal is to alleviate the burden of penalties whenever possible, which will allow you to pay off the debt faster and move on with your life.
GROUNDS FOR PENALTY ABATEMENT
Most penalty abatement requests are based on “reasonable cause.” Generally speaking, reasonable cause exists when circumstances or events beyond your control led to the penalty. For example:
- Severe illness (yourself or close family member)
- Natural disaster
- Ignorance of the Law
- Unexpected loss of job
- Other unforeseen circumstances
The key to any successful penalty abatement request is organization and proper application of the law. Each penalty abatement request should be submitted with substantiating documents. These documents will provide credibility to your claim because the IRS will have proof of the event that led to the penalty. For example, if you came down with a serious illness you could provide a doctor’s note or other records that prove the illness.
Properly applying the law to your situation is equally important. A key aspect in the case of penalty abatement is causation. Therefore, your penalty abatement packet needs to tie the circumstance to the penalty (i.e. if the circumstance did not occur the penalty would have been avoided altogether).
Generally speaking, the IRS does not easily approve penalty abatement requests. Therefore, it is important to submit a strong case that is organized and properly applies the law to the facts. Spaulding Legal, APC takes the time to review and analyze the facts of your specific situation. Then, we work to present the strongest possible case to the IRS. As a result, we optimize our chances of saving you thousands of dollars.
APPEAL, APPEAL, APPEAL…
If your initial request is denied, there is still hope. As a procedural matter, the IRS gives taxpayers the ability to appeal the initial determination. If you have a good case, it is always recommended to appeal. Appealing will allow you to supplement your original packet (perhaps with more substantiating documents). Additionally, as opposed to the initial request, during the appeals process you will likely get the opportunity to speak with an actual person. At this stage, you should seriously consider hiring an attorney because they are trained to advocate and persuade the trier of fact (the IRS appeals officer in this case). Also, there is a psychological component to having an attorney conduct the appeal. Specifically, it tells the IRS employee that you are serious about your claim, and it requires them to provide a reasoned response to the request.
At Spaulding Legal, APC we have seen how powerful the appeals process can be in achieving a successful outcome. If the IRS has denied your initial penalty abatement request, please contact us to see if submitting an appeal is beneficial.