Have you received a nasty IRS notice with penalties assessed? Ugh, the worst! So yes, you may owe the tax due but no, you may be able to get out from under those penalties.The IRS offers a First Time Abatement.
This abatement relates to penalties for failure to file, failure to pay and failure to deposit required tax if a taxpayer is otherwise compliant and has not used FTA within the prior three years. However, FTA is generally provided only if a taxpayer requests FTA or reasonable cause relief. This is the critical piece, you have to actively REQUEST the penalty abatement.
In 2021, the IRS granted FTA to about 200,000 taxpayers requesting relief from these penalties, but there were about 4.3 million taxpayers eligible for relief from these penalties who did not receive it. Wow! So 4.3million people paid penalties they did not have to pay because they did not know that an abatement existed. There alone is a reason to work with an experienced and pro active tax advisor.
So, only a small percentage of taxpayers received penalty abatements just for asking while the overwhelming majority of taxpayers who do not know the IRS is willing to abate these penalties did not.
In addition, there is the “reasonable cause” penalty relief available. This needs a little more documentation and help from your tax advisor but is absolutely worth applying for.
Don’t pay penalties if you dont have to! Ask for help.
PS: We are mid year, time to do some tax planning. We dont have any spots available in July but we can work with you in August. Reach out now to schedule your Tax Assessment with Wendy.