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Can You Ask the IRS to Waive Penalties and Interest?

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Remove Internal Revenue Service Interest Charges

Those who owe the IRS money owe more than simply their taxes. The Internal Revenue Service (IRS) adds penalties and interest to the tax bill. As a result, getting into a payment agreement with the IRS is critical: Your interest rate will rise in direct proportion to your debt.

Therefore, it should come as no surprise that people in this situation routinely petition the Internal Revenue Service to have their interest waived or reduced. The Internal Revenue Service (IRS) will not waive interest costs in most cases, but if you take the initiative, you can minimize interest rates on your own.

Penalties Eligible for Relief

Penalty remission is available for the following categories of penalties:

– Information Return

– Failure to File

– Failure to Pay

– Accuracy-Related

– Failure to Deposit

– Dishonored Check

– Underpayment of Estimated Tax by Corporations

– Underpayment of Estimated Tax by Individuals

Abatements for the First Time and Outstanding Taxes

You can reduce your tax penalty by filing a First Time Abate even if you haven’t paid the entire amount due on your tax return. A Failure to Pay Penalty will be assessed and will increase until the total amount of tax is paid.

For example, suppose you did not pay all of your taxes by the due date in 2021 and got a letter specifying the delinquent amount and any related penalties. You contacted the IRS and asked for a penalty reduction, which they granted the first time. The IRS will remove the liability as of the date specified in your request. If tax liabilities are not paid in full, the penalty will increase. 

You can submit a second request for penalty reduction under the First Time Abate for the same return by waiting six months after paying the total tax and then getting in touch with IRS. First-time Abate relief is granted for the total penalties accrued until the tax is paid in full.

How to Request a Penalty Reduction

The IRS may reduce or perhaps remove some of the penalties over the phone. You must have supporting proof and contact the toll-free number in the upper right corner of your notice to receive penalty relief for a reasonable cause.

Please have the following information available before you call:

The notification that you received

The punishment that you want lessened.

The reasons why, in your opinion, IRS should get rid of it

If you request a reduction for a good reason during the chat, but they “discover” that you are eligible for a first-time offender exemption, they will apply the latter.

If you do not qualify for any of these kinds of relief or if the IRS is unable to grant your relief over the phone, you may file a written request for relief using Form 843, which contains a claim for refund and a request for abatement.

What happens if the Internal Revenue Service denies my request for a penalty reduction?

If the Internal Revenue Service (IRS) denies your request to have a penalty withdrawn from your account, you may appeal the decision to the IRS’s Independent Office of Appeals. You have thirty days, commencing on the day the notice of refusal was delivered to you, to submit an appeal request.

Submit a payment plan request.

You should make what payment you can now and then request a payment plan if you know you won’t be able to pay the total amount of your taxes and penalties by the due date. Some penalties might be reduced if you work out a payment plan in advance.

Seek the advice of a professional.

A skilled tax professional may assist you in filing for penalty abatement, which may boost your chances of qualifying for some relief on the interest and penalties you owe. However, submitting an application for a payment plan or requesting a penalty reduction is not difficult. Remember that the Internal Revenue Service (IRS) has the authority to cancel all or a portion of your tax liability in certain situations as part of a program known as a “fresh start.” The standards, however, are strict, and you are strongly advised to seek the advice of a tax professional if you want to discover the best possible solution for your debt.

To put it briefly

The Internal Revenue Service (IRS) may be kind to you and waive part of the interest or penalties you owe. However, because they are always attempting to recoup the great bulk of the money initially due to them, the IRS will frequently refuse to release you from your commitment to pay the debt. This article should give you some helpful advice on how to lower the amount of taxes you owe.