How to Get IRS Tax Penalty Abated

If you thought the interest on credit cards are difficult to accept, the Internal Revenue Service imposes penalties and interest that can put the credit card companies to shame, and it is coming up with more creative ones all the time. Those assessed by the IRS often result in a taxpayer owing more in penalties and interest than his original tax bill. But there are ways to have many of those penalties set aside.

Difficulty: Challenging

Instructions

Directions

1. Make sure that the IRS has not made mistakes. It is estimated that about 20 percent of the records maintained by the IRS are incorrect and it is up to the taxpayer to find them, particularly if they result in penalties. When you talk with an IRS agent, ask that your records from which the penalties were assessed be sent to you. Then review them thoroughly.

2. Hire an experienced tax lawyer to represent you because whatever you will pay in fees likely will be more than made up in tax savings. If possible, find one that has worked for the IRS in the past because he will know what the agents are looking for and will be able to find solutions that are acceptable to both you and the IRS. For instance, he will recognize that the IRS often imposes a penalty for mistakes on your return, late payment of your taxes or fraud. The first two circumstances can easily result in abatement of part or all of the penalties by justifying the errors or late payments. Fraud is difficult to prove, so your lawyer must prove that you acted in good faith when you filed your return.

3. Make a so-called "offer in compromise." Essentially, you will agree to begin making monthly payments if the IRS agrees to a reduction in the amount of tax that you owe. If you are successful, you will also keep the IRS from garnishing your wages or placing a lien on your property. In both instances, its action will be reported to the three credit bureaus, resulting in your getting future credit difficult.

4. Prove to the IRS that you are unable to pay your taxes and penalties because of serious illness, a debilitating disability or retirement, and you stand a chance that your taxes and penalties will be forgiven entirely. This result occurs only rarely, and the IRS will file a lien against your property in the event that you later have a financial windfall. Also, the IRS will claim all of your future tax refunds and rebates.

Resources

• More on tax relief

[theflybri]

on 9/9/2009 Filing an unqualified Offer in Compromise will result in too many negative consequences that far outweigh any good. If you have good representation (preferably an experienced attorney or Enrolled Agent), you should be advised that you have better options available to halt aggressive collections (i.e. wage garnishment, bank levies, and A.R. levies). The "OIC" is real, but very few taxpayers qualify for a reduction of their liability under the program.