What You Need to Know About IRS Penalties

There are several valid reasons why taxpayers generally feel at least a little apprehension when talking about IRS penalties and paying back taxes. Fortunately, unknown to many, there are actual guidelines and processes set in place that are designed to give regular taxpayers some recourse when dealing with an IRS penalty. Taxpayers can ultimately be dismissed from back taxes and other penalties through negotiations and installment plans.

Several circumstances merit the imposition of penalties to taxpayers. These include among others, not filing a tax return, purposely misleading the IRS and not paying quarterly taxes. To learn more about this topic, you may refer to the Penalty Handbook, which an entire collection of IRS penalties, penalty abatement guidelines and assessment procedures. Remember, the IRS does not get all of their money from simply collecting taxes, but also from penalties levied on taxpayers.

With the intention of ensuring that the IRS does the penalties assessment accurately, the government made several options available for all taxpayers. With the recent changes on IRS policies, the process of dismissing tax levies is now relatively simple. While it is still slightly difficult in contrast to the nearly impossible battle it once was, times have changed considerably.

With the IRS Penalties Handbook, taxpayers are informed of the fundamentals of interests, levies and penalties abatement. With this set of information, the risks of being penalized are significantly decreased.

Today, as stated in the IRS Penalty Policy Statement, IRS penalties are no longer automatic. Basically, if you are able to give a reasonable explanation and that your actions are not due to willful negligence, or that you intended to defraud the IRS, then you may in fact, qualify for a cancellation of some or all of your IRS tax penalties. When they are cancelled, it is called an IRS abatement of penalties.

The IRS actually makes as much as $15 billion, on the average, on collection from penalties alone. On top of the fact that the government earns a considerable amount of money from this, the fact is, this is too burdensome for the taxpayers.

It is the accumulation of the original tax due and the applicable penalties that makes matters worse for a lot of people. Occasionally, because interests are accrued on the new, larger sum, total amount due is doubled or tripled in just a few months. As a result, taxpayers will have a difficulty paying off the entire amount.

If you are given a notice stating your IRS penalties, the first thing that you have to do is make a written request for the cancellation of this. This is the start of the abatement process, which, fortunately, is a right given to all taxpayers. Provisions of all IRS penalties have a “good faith exception.” This clause provides the IRS with the capacity to legally cancel your penalty if they decide that you did not purposefully attempt to defraud or mislead the IRS. To reiterate, for many, IRS penalties may spell danger but alternatives and resources provided make this matter easier to deal with.

Share on Facebook

Originally posted 2008-05-30 14:55:47. Republished by Blog Post Promoter

• The Roth IRA and Retirement Taxes I have previously written about the potential benefits of a Roth IRA for retirees. If you currently have a non-Roth IRA, the questions about the benefits of converting are becoming more urgent. This is because of the window of opportunity for conversion to a Roth (without income restrictions) that is......
• Paying too much taxes? Each year around this time I start thinking about Christmas shopping and doing my tax return. Two things that I shouldn't dread, but because of the process involved I always do. Because of online availability I don't mind Christmas shopping as much as I used to, and with the ever......