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  • Brian Barto, EA

Can the IRS Cut Me a Break on These Penalties and Interest? What is Penalty Abatement?


Our firm deals with taxpayers who owe back taxes. If you owe back taxes the penalties and interest can accumulate very fast and add to your tax debt. You may qualify for relief from penalties if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control.


If you received a notice, be sure to check that the information in your notice is correct. If you can resolve an issue in your notice, a penalty might not be applicable.


Penalties Eligible for Relief:

Penalties eligible for penalty relief include:

Failing to file a tax return

Failing to pay on time

Failing to deposit certain taxes as required

Other penalties as applicable.


Types of Penalty Relief

The following types of penalty relief are offered by the IRS:

Reasonable Cause

Administrative Waiver and First Time Penalty Abatement

Statutory Exception

The IRS may provide administrative relief from a penalty that would otherwise be applicable under its First Time Penalty Abatement policy.

You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:


You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.

You filed all currently required returns or filed an extension of time to file.

You have paid, or arranged to pay, any tax due.


The failure-to-pay penalty will continue to accrue until the tax is paid in full. It may be to your advantage to wait until you fully pay the tax due prior to requesting penalty relief under the Service's first-time penalty abatement policy.


Is Interest Relief Available?

The IRS doesn’t abate interest for reasonable cause or as first-time relief. Interest is charged by law and will continue until your account is fully paid. If any of your penalties are reduced, the related interest will automatically be reduced.


Interest start date

Interest on an individual tax return (Form 1040) will start on the tax filing deadline (usually April 15), if your return shows you owe tax. An extension of time to file is NOT an extension of time to pay. If April 15 is on a weekend or holiday, your return will be considered timely filed and paid, as long as you file and pay by the next business day.


Payment on notices

If you received a notice, interest will stop being charged on the amount shown on your notice, if you fully pay the amount you owe before the “pay by” date. Payments are applied first to tax, then to penalties, and finally to interest.


Contact our office for help to get your penalties or interest reduced. At Tax Debt Resolution Services of Winchester VA, our mission is to help you eliminate your IRS issues and the stress the IRS has created in your life and help you get back to doing what you do best! We help our clients in Winchester VA, Strasburg VA, Martinsburg WV and Charles Town WV to resolve their tax debts! If you need assistance please feel free to contact me at 540-662-4432 or brianbarto@libertytax.com.

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