IRS first time penalty abatement
Before proceeding to the topic we shall first of all try to understand what is Internal Revenue System (IRS)? It is the US federal agency for the collection and enforcement of tax laws. It not only deals with individual taxes and employment taxes but also has its hands in dealing corporate taxes, gift taxes, and estate and excise taxes. US government has given vast powers to this organization. This organization was established by former US President Abraham Lincoln in the year 1920.
What do we mean by first time penalty abatement?
This relief is available to the taxpayer if he is regular since last three years in the payment of his tax amount and filing of his tax returns and has not served any penalty, or he has filed all his tax returns with in extended period without any pending request from IRS in relation to any unfiled return or in other words in relation taxpayer it applies to failure to pay penalties and failure to file return. Gift tax and estate tax are not covered under this category. This concept was introduced 12 years back. At that time most taxpayers were very well aware about the concept of reasonable cause as the basis for penalty abatement but the concept of first -time abatement (FTA) relief concept was less known to the people. Likewise for businessmen and salaried employees it relates to failure to pay/deposit and failure to file. If IRS accepts FTA request payer can save thousands of dollars. It is important to note that taxpayer can claim first time abatement (FTA) for only one assessment year. If you have any doubt on the subject our qualified professional tax attorney will help you, what simply you have to do is to intimate us on telephone before your visit.
How can you approach IRS for abatement of this penalty?
You have to follow different steps for asking before IRS for First-time tax penalty abatement:-
- You have to write letter to IRS. It should be properly addressed to the concerned IRS official clearly mentioning your name, social security number, tax year and tax form. You should specifically ask IRS to wave of tax penalty under IRS First time abatement waiver.
- You can also mail to IRS on mail id requesting for first time abatement waiver. Mail id address is mostly mentioned at tax bill. If you do not have tax bill, you can also mail your request at IRS centre responsible for tax matters.
- You will get reply from IRS within three months intimating you whether your request has been accepted or rejected. And if it is rejected you will be provided with reason for rejection. If you do not get any reply from IRS within three months, you can refresh IRS through letter.
- When your request is accepted, you will get second letter from IRS intimating you that your request has been accepted.
- After receiving second letter from IRS, you have to confirm from IRS, whether your penalties have been waived off.
Whatever mode you choose, it is necessary that you must be equipped with all “concerned documents” in your favor. Third party help in the form of qualified income tax lawyers can also be availed.
By “concerned documents” we mean that you should have in your possession all medical bills, in case you were ill. If you have been misled by some tax professional, you should have in your possession all the concerned correspondence with them. Sometime it happens that you file your tax return in some other branch of the IRS, in this circumstance you have to get confirmation in writing from that office that they have received your paperwork and it is one of the causes for not filing the tax return in time.
Different “Reasonable causes” for not filing tax return, tax amount or payroll taxes in time.
When you approach IRS either as an individual taxpayer or businessman taxpayer for first time tax penalty abatement, there shall be “reasonable cause” for not filing tax return, tax amount or payroll taxes in time. Some of these reasonable causes are as given below:
- You were in depression over the death of your near and dear one.
- Divorce case as a result of which your income was reduced.
- Sudden loss of job without getting any notice period.
- Mental condition was not to the tune either because of in taking of alcohol or some other addiction.
How IRS can determine before granting FTA that taxpayer has no fault history in relation to filing of tax return or tax amount?
When any taxpayer or his attorney requests IRS for first time abatement of penalty. To know the clean history of the taxpayers, IRS officials make use of decision making software with name Reasonable Cause Assistant (RCA). This software helps to determine whether individual taxpayer or businessmen are eligible for FTA. Although IRS has tried its best to be fair in judging these requests, but this software is unfair in making determinations. If you are also one of the individual taxpayer or businessman who has clean history since last three years in filing of tax return, payment of tax amount or payment of payroll taxes and your request has not been allowed by IRS, Qualified IRS tax attorney San Diego will help you in the matter with negotiation on your behalf with IRS.
“not ask-not get”
What is the reason most of the taxpayer have no knowledge on the subject? This is because the subject has not been much publicized by the IRS. And this is based on the phenomenon “not ask-not get”. Therefore if you want to avail this facility, it is your duty to ask from IRS.
Primary reason behind this policy is to encourage volunteer compliance of tax matters by individual tax payers and businessmen and not to penalize them for one year if they are regular in tax compliance matters for the last three years.
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