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Posted On July 09, 2018
Tax Debt? You May Qualify for Penalty Abatement

Tax Debt? You May Qualify for Penalty Abatement

To consumers who owe a tax debt, the addition of failure-to-pay penalties makes that debt increase significantly, but the first time penalty abatement waiver can help with those penalties. The IRS has very specific requirements for penalty abatement, but for those who qualify it can provide needed relief from the penalties connected to tax debt balances.

How Penalties Are Charged on Tax Debts

When a consumer owes a tax debt, the IRS typically charges a penalty of 0.5% on the total debt. This is known as the failure-to-pay penalty. In addition to that, the IRS charges a monthly interest fee for tax debts. The failure-to-pay penalty and the interest charges continue to grow until the debt is fully paid.

What Is the First Time Penalty Abatement?

The first time penalty abatement is administrative relief from penalties that are associated with failing to file a tax return or pay taxes on time. Any interest charged on that penalty is also removed or reduced when the abatement reduces or removes the penalty. It does not remove the interest on the tax debt itself, but it can reduce the overall debt significantly by removing those penalties. Also, since the failure-to-pay penalty accrues every month, some taxpayers benefit from waiting to file the abatement request until after they have paid the bill in full so the full amount of the penalty is removed.

How to Qualify for First Time Penalty Abatement

To qualify for first-time penalty abatement, there is a very specific criteria that the IRS is looking for in order for a taxpayer to qualify for a first-time penalty abatement. Unfortunately, many taxpayers who qualify for first-time penalty abatement do not use it because the IRS does not advertise this service and thus the option to use penalty abatement for tax debt help is often overlooked. Call a tax attorney at Randolph Law Firm, P.C. at 702-757-7777 to discuss your situation and see if you are a good candidate for a first-time penalty abatement.