Federal Tax Matters
Are you facing IRS tax penalties that are causing stress and financial strain? At Azarvand Tax Law, we understand the complexities of tax law and are here to assist individuals and businesses in resolving their tax controversies. Penalty Abatement is a process that provides relief from specific penalties imposed under certain circumstances.
What can be abated
It is important to note that penalties are subject to accrue interest. The IRS Comptroller interest rates are adjusted periodically and apply to all underpayments.
Late filing penalties are imposed when taxpayers fail to file their tax returns by the due date. These penalties typically accrue at a rate of up to 10% of the tax due. Additional monthly interest charges also apply to the unpaid tax amount.
Begins to accrue when taxpayers fail to pay their IRS taxes by the due date. Interest and penalties continue to accrue until the tax is paid in full. The penalty rate may increase if the tax remains unpaid after receiving notices from the Comptroller.
For business taxpayers with withholding requirements: 1–5 days late: 2% of late payroll tax deposits; 5–16 days late: 5%; 16+ days: 10%. Penalties increase further if you fail to respond to notices from the Comptroller.
Late filing of information returns can result in penalties. Penalty amounts increase based on how late the information return is filed. Intentional disregard of filing requirements results in higher penalties.
20% of the portion of the underpayment that was understated because of negligence or disregard of rules and regulations.
2% of the amount of the check or a minimum fee, whichever is greater. Additional penalties may apply for repeat offenders.
Generally, underpayment of estimated tax by corporations or individuals is penalized based on the interest rate set by the Comptroller of IRS.
Getting relief
Reasonable Cause Penalty Abatement (“RCPA”): The taxpayer must demonstrate that they exercised ordinary care and prudence and were nevertheless unable to file their return or pay the taxes on time. Examples of valid reasons for failing to file or pay on time may include (but are not limited to):
Taxpayers requesting Reasonable Cause Penalty Abatement must submit a written explanation to the Comptroller of IRS.
Associated Interest Relief: If penalties are reduced or removed, interest related to those penalties may also be adjusted, which can help alleviate the financial burden of IRS tax penalties.
Why it helps
Penalty Abatement provides relief from specific penalties imposed under certain circumstances, easing the stress and financial strain they cause.
If penalties are reduced or removed, interest related to those penalties may also be adjusted, which can help alleviate the financial burden of IRS tax penalties.
Our team of tax attorneys and CPAs is dedicated to providing personalized solutions to your specific situation as you navigate the complexities of requesting abatement.
Next steps
At Azarvand Tax Law, we have experience helping clients navigate the complexities of requesting penalty abatement from the IRS Comptroller. Our team of tax attorneys and CPAs is dedicated to providing personalized solutions to your specific situation. Contact us at [email protected] or visit our page here to schedule a free 30-minute consultation and take the first step towards tax compliance and resolving your tax liability. If penalties are only part of a larger balance, an Offer in Compromise or an Installment Agreement may also help.
