| Good Citizen 'Loophole' | | | | pertinent information to solidify your case. Always |
| The IRS would like every taxpayer to believe that | | | | send your IRS letters certified mail with return receipt |
| when it comes to paying penalties and interest, we are | | | | requested. |
| at their mercy. If you are an upstanding citizen | | | | Cancelling Interest |
| however, this is definitely not the case. The tax code | | | | Interest, though related to penalties, is not necessarily |
| provides all 140 penalties with a good faith exception; | | | | the same thing. There are only three instances when |
| which means, if you were not intentionally seeking to | | | | you can apply for your interest to be cancelled; when |
| defraud the government by failing to pay your taxes | | | | the interest has been caused by the IRS in the form of |
| and you would like your penalty or interest abated, all | | | | their delay in processing your case, by an IRS error, or |
| you have to do is ask. | | | | by an erroneous refund issued by the IRS, but which |
| Penalty Abatement | | | | you in no way caused. |
| To request that your penalties be reduced, decreased | | | | In each case, the procedure is to write a letter |
| or eliminated, write to the IRS service center. Make | | | | providing detailed facts pointing the reader toward one |
| sure you address your request to the attention of the | | | | of these three areas. Again, address the letter to the |
| Adjustments/Correspondence branch, and label the | | | | service center handling your case, provide as much |
| envelope clearly as a 'penalty Abatement Request'. | | | | documentation and specificity as possible, and send |
| The address will vary based upon whichever service | | | | the letter certified mail with return receipt requested. |
| center your notice comes from, but a complete listing | | | | Be sure to emphasize in your letter that because it |
| is available at irs.gov/localcontacts/index.html. | | | | was an IRS error you are entitled to having all or part |
| Then, being very detailed, give any facts and the | | | | of the interest cancelled. |
| situation surrounding your case. Be certain to present | | | | Summary |
| your case as your having no intent to cheat or lie, that | | | | It is understandable to be a bit intimidated by the IRS, |
| you acted in good faith and that you had a good | | | | especially as a taxpayer who owes taxes. Having the |
| reason for your actions. Do not be vague. If you have | | | | right information on tax abatement is just as important |
| supporting documents, for instance if you lost your job, | | | | as having the right attitude however, and in some |
| then send copies of any termination letter from your | | | | cases can save you a fortune in penalties or interest |
| employer along with your letter to the IRS. Be clear | | | | that can double or even triple your liability. |
| and specific, giving names, dates and any other | | | | |