If your request for the First-Time Penalty abatement fails the next course of action is Reasonable Cause Penalty Abatement.
The taxpayer or Enrolled Agent would submit a written request for penalty relief based on a reasonable cause.
Accepted Reasons for Penalty Abatement:
- Natural or man-made disasters.
- A taxpayer’s death, serious illness, incapacitation.
- Tax preparer errors.
- Bookkeeper/accountant fraud or embezzlement of funds.
- Erroneous oral or written instructions or advice furnished by the IRS.
- Financial hardship.
Even if any of these situations have occurred you could still be turned down by the IRS. In that case you would have the option of filing an appeal.
When a taxpayer owes a substantial amount of money, it is a very stressful situation. This could affect your family, marriage and friendships. Dealing with the IRS in these situations can be stressful and intimidating.
This is where Enrolled Agents come in handy. We are enrolled to practice before the IRS. We take the stress away and handle the situation for you. We understand all the available options in these situations.
You may see the famous commercials that state “pennies on the dollar.” Sounds great, doesn’t it? This is not reality. The only time that can possibly happen is if the taxpayer is insolvent.
These firms have you pay them at least $5K, insist you pay them first and not pay the IRS. They tell you they can settle your case for little or no payment. It very rarely happens that way!