Not only does the IRS charge you penalties for falling behind on your taxes, but the IRS also has the power to charge interest on top of the penalties. This is why it’s so important for you to take action on your tax debt and other tax problems with the IRS, because delaying action gets more and more expensive the longer it takes.
There are certain programs that the IRS offers that do give you immediate relief from certain penalties and enforcement actions. You are probably familiar with the IRS Fresh Start Initiative and the IRS Offer In Compromise Program. These are just two of the programs that can give you relief. There are other programs.
The Fresh Start Initiative and the Offer In Compromise program can stop penalties and interest and even reduce the amount of money you owe. Consult with a tax professional to see if these options are available to you. Not everyone is eligible for the Fresh Start Program or the Offer In Compromise Program. If you call the tax professionals at our office, we’ll tell you in 15 minutes or less if you might qualify. This phone call and phone consultation is totally free of charge, and yes it only takes 15 minutes.
But if you don’t qualify for the Fresh Start Program or the Offer In Compromise Program there are other options for having penalties and interest removed. We can tell you about these other options. In some cases, you can handle these options on your own without paying anyone a fee and if these other options are open to you we’ll even tell you what to do yourself without paying a fee.
Penalties Eligible for Relief
The IRS says penalties eligible for “penalty relief” include the failure to file and failure to pay penalties; penalties for dishonored checks, and the penalty for the underpayment of estimated taxes. In fact, the IRS recently announced that it was dropping the “failure to file penalty” for the 2019 and 2020 tax years to help taxpayers who had financial problems during the Covid pandemic.
Types of Penalty Relief
The IRS says the types of penalty relief include the “first time penalty abatement” and the “relief for reasonable cause.” These are important terms to remember because using these terms can trigger a positive response for you from the IRS. For these types of relief it becomes important how you ask the IRS for help (that means using the “trigger terms”) and again asking a tax professional for guidance can be very helpful.
How to Request Penalty Relief
If you think you can handle a request for relief yourself follow the instructions in the IRS notice you received.
Some penalty relief requests may be handled over the phone. But there is free help available from our tax professionals.
Some penalties can be reduced or eliminated with a phone call while others are more complicated.
Be realistic about dealing with the IRS yourself. Your tax problems might have been caused by something you did before, so do you think getting out of tax trouble now is something you should tackle on your own?
Take advantage of free consultations with tax professionals when you can. This is especially important with the Offer In Compromise Program and the Fresh Start Program. It is also very important if you are trying to negotiate a payment plan with the IRS, The IRS has a formula for how much you should be able to pay towards your tax debt based on your income and living expenses. Frankly, the IRS formula won’t leave you much extra money so be cautious if you try to offer the IRS payments that are too small.
Again, we offer a free phone consultation about your tax debt and how to resolve your tax debt with the IRS. We’ll talk to you about the Fresh Start Program and the Offer In Compromise Program, and we’ll discuss with you how you might qualify for relief from certain IRS enforcement actions and penalties. Call us. The call and the consultation really are free.