| p>Penalty abatement is forgiveness of penalties | | | | If you had a serious hardship that precluded you from |
| associated with tax debt that have been added over | | | | filing or paying on time you have a decent shot. Being |
| the course of the debt. Sometimes the IRS will agree | | | | hospitalized for a good portion of that tax year - |
| to remove such penalties when a tax payer has | | | | particularly during tax season - would work as a |
| shown a desire to resolve the debt and has sound | | | | reason for penalty abatement if you could prove it. |
| reasoning for the request. | | | | Enduring a disaster or personal duress, being in prison |
| How do I ask the IRS to Abate Penalties? | | | | that year, or receiving advice from a professional that |
| Form 843 is used to request an abatement of | | | | resulted in IRS trouble may also work for abatement. |
| penalties. This form will ask for details such as name, | | | | Unfortunately, getting bad advice from a tax preparer |
| address, SSN, tax years in question and reason for the | | | | or CPA is not unheard of. Former clients of mine |
| abatement request. You can also send a penalty | | | | shared some of their stories with me of past mishaps |
| abatement letter along with the form, which acts as a | | | | from time to time. Some reported being assured |
| cover letter for the form and outlines your reasons for | | | | further extensions to file would be sent, or even that |
| the request. | | | | they didn't need to worry about paying the tax due |
| It is wise, as a show of good faith, to pay the tax or | | | | right away. Months went by before the late return |
| set up a payment plan to resolve the debt prior to | | | | was filed, and they were shocked to receive a |
| asking for abatement of penalties. This way it won't be | | | | balance due letter noting late filing as well as failure to |
| taken as an attempt to dodge the debt, and anything | | | | pay penalties. |
| you overpay by being proactive will be credited to you | | | | Note that the IRS will expect you to back up your |
| upon approval. | | | | reasons for the penalty abatement request; the more |
| More on mailing the form in and certain limits can be | | | | documentation you can produce the better. |
| found on the IRS website. | | | | Each Penalty Abatement Year Is Separate |
| Submitting a Penalty Abatement Request | | | | If you've got a few years that carry balances and |
| Submitting a request for abatement of tax penalties is | | | | want to pursue abatement on more than one, note |
| telling the IRS you had a good reason for what led to | | | | that each year is independent of the others. You'll |
| said penalty being added in the first place. Claiming | | | | need a new form 843 for each tax period, meaning |
| ignorance does little with the IRS, as it is the tax | | | | the merits of your reasoning may differ year by year. |
| payer's responsibility to be aware of his or her tax | | | | As such, don't be alarmed if some years are accepted |
| situation. | | | | and some are not. |