Penalty Abatement

Reasonable Cause is the most common IRS penalty relief program.  The IRS Manual gives the following definition.

“Reasonable cause relief is generally granted when the taxpayer exercises ordinary business care and prudence in determining their tax obligations but is unable to comply with those obligations.”

This basically means something out of the control of the taxpayer has taken place that has prevented you from filing  or paying your taxes on time. Also it must be shown that you  took reasonable steps to adjust to the events and were still not able to pay and or file on time.

Their may be  circumstance cause great  sympathy is  not going to have the IRS abate your penalties. Their needs to be more to it on the tax payer side then a sad story. The reasons for abatement need to be based on logical and legal reasoning.

The IRS gives some examples of things that will taken into account for a penalty abatement. They are listed below.

  • Not knowing the Law it must be demonstrated that you tried to learn the law.
  • Mistake took place, but you must still show that due diligence took place.
  • Illness, Unavoidable Absence or Death.
  • could not obtain records needed to complete your taxes.
  • poor guidance or advice from a competent tax professional
  • poor guidance or advice from the IRS, written or oral.
  • Natural Disaster, fire, tornados , hurricanes or other terriable events.
  • Acts of God

The Internal Revenue Manual goes on to say that any reason will be accepted as reasonable cause if it can be shown that the taxpayer exercised ordinary business care and prudence and, despite that, was still not able to comply with their tax obligations.