The IRS has various penalty abatement programs for those who qualify. The penalties that are eligible for relief include the following: Failure to File Penalty, Late Payment Penalty, Underpayment of Estimated Tax Penalty, and Accuracy-related Penalties (including underreported income or overstated deductions). These penalties can be costly and time-consuming if not properly addressed. Find out more about these IRS penalty abatement programs and if you qualify!
IRS Penalty Abatement
The fourth program is Penalty Abatement. This status suspends the collection of late-payment penalties and prevents levy/garnishment actions taken by the government when a taxpayer cannot pay their tax debt in full, or even at all. The government will also not attempt to collect any interest that has accumulated on your account since you first became a CNC account. This program is different from Currently Not Collectible, because penalty abatement suspends penalties and interest on the debt, whereas CNC is simply the IRS terminating their attempts to contact and seek collection from you.
Who Qualifies?
A taxpayer qualifies for Penalty Abatement if they are unable to pay their tax debt due to economic hardship. This is defined as a circumstance outside of the taxpayer’s control that prevents them from meeting financial obligations, such as loss of employment or significant reduction in income. If you tried to comply with the law but were unable to pay your tax responsibilities due to circumstances beyond your control, you may be eligible for penalty relief.
Penalties
The following are penalties eligible for penalty relief:
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Failing to file a tax return
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Failing to pay on time
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Failing to deposit certain taxes as required
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Other penalties as applicable
Types of Penalty Relief
The IRS offers different types of penalty relief:
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Reasonable Cause
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Administrative Waiver and First Time Penalty Abatement
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Statutory Exception
IRS Fresh Start Program
Penalty Abatement also happens to be one of the four major components in the IRS Fresh Start Program. There are many programs that are offered in order to solve your tax-related issues in some sort of way. But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program.
This program is designed to relieve not only the IRS, but also your back taxes. It does this by making sure you are filing accurately and gives up-front payment options solutions for those who can’t afford their tax debt payments. This relief program utilizes four of the major tax resolution strategies into one consolidated program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.
