How To Get Help With a Penalty Abatement

Getting the notice of an IRS penalty, with dollars, interest and penalties due, can be daunting. However, if you’re notified of a penalty, there are steps you can take to reduce your eventual payment burden. You must be prepared to act quickly.

Watch the Calendar

Carefully study the documentation you received and be ready to contact a professional to help you decipher the reason for the penalty, the dollar amount and the interest that is currently accruing. Get your documentation together so you can be ready to file your taxes when you apply for the abatement or waiver, as you’re allowed.

Is This Your First Penalty?

If it’s your first penalty, there are steps you can take to qualify for a First Time Penalty Abatement. Be aware that, even if you do qualify for this waiver, the dollars you owe are still owed and interest will continue to stack up until you get the penalty released.

If your penalty has simply been applied because you didn’t file, contact a tax professional and get some help on getting your filing done as soon as possible. If you lost documentation in an emergency, gather up police reports and other documentation about the loss and be ready to present this information.

Why Were Taxes Left Unpaid?

Housefires, floods and other disasters happen. If you need help getting a penalty abatement started so you can stop any additional penalties from piling up, do your homework. Order additional copies of receipts, statements, and other justifications for tax breaks. Request an extension for moving past the crisis before the deadline if at all possible.

If you suffered a terrible personal loss, consider also filing a request for extension. The loss of a loved one is a terrible shock and the last thing you want to have to worry about is going through receipts and bank statements. That being said, you can save yourself a lot of heartache and headaches by making just a few phone calls before the return is due to request an extension. Keep careful notes of who you spoke with, what time and what was discussed. They may not be able to give you an extension or even much comfort over the phone, but if you have to file for a non-filing penalty abatement for distress, these notes will be an excellent indicator that you tried to communicate your challenge with the IRS.

Justifications Can Be Considered

Carefully review the reasons for your late or inaccurate filing. For example, did you suffer a major personal upset or severe illness? Many who fall behind on filing taxes do so because of the death of a close loved one; the idea of contending with tax returns just becomes too much.

You can deliver your justifications in three different ways. You can send a

• send a written petition requesting a refund for the abatement due to the circumstances you suffered
• request an oral interview with an IRS rep
• file a Form 843 with the IRS

If you ignore demands for payment or a penalty for long enough, you may face a garnishment of your wages.

Garnishments Can Be Reduced

If there’s not getting out of the penalty and you don’t pay the fine and interest, your wages may be garnished. Be aware that bankruptcy is an option for some of the fees associated with penalties, interest and fines, but the rules keep changing and state laws vary.

However, if your wages are being garnished and you simply can’t survive on what is left, be aware that you can get a reduction in the amount garnished if you can prove hardship. Do your homework. Bring in all your data about your monthly budget so you can demonstrate hardship and stay patient. The IRS is a large organization and moves slowly.

The IRS needs to collect the money owed. It’s not their intention to take your house or to leave you bereft and destitute. However, acting early against a penalty notice can reduce the eventual fee you do have to cover. Contact the IRS via the toll-free number on the penalty notice and be ready to stay on hold for a time. If you can be near a fax machine during this call, be ready to send in documents to the person you’re talking to. Be aware that the window for sending in documentation may be short.