How to Get an IRS Tax Penalty Waived


The Internal Revenue Service (“IRS”) has many tax penalties for taxpayers that fail to meet certain requirements.

Some of these penalties are:

* Failure to File

* Failure to File on Time

* Failure to Pay

* Penalty on Underpayment of Estimated Tax


Why Should The Penalty Be Waived?

It’s possible an IRS penalty can be waived. Possible being the key word. Just be sure to think about this before you attempt to get a penalty abated. The primary reason that the IRS will consider abating the penalty is due to reasonable cause. Don’t bother attempting to have a penalty waived if you don’t have a leg to stand on. You’re just wasting your time. Some penalties may be too small to fight over.  Others will be large enough you’ll want to Get an IRS Civil Penalty Waived and Keep Your Small Business.

Reasonable cause could be death or serious illness to you or your family members. If this is the case, get as much documentation as you can to support your case. Other possible reasons for reasonable cause could be erroneous advice from either the IRS personnel or your tax adviser. Additionally, the IRS was very flexible waiving penalties with Hurricane Sandy.

One of the best ways to support your reasonable cause claim is to have a long history of timely filing and timely paying your taxes.

The facts and circumstance of each case will dictate the outcome of the request. As an attorney once told me, “there is nothing like a good set of facts to support your case.” Well said.


How to Get the Penalty Waived

To potentially get the penalty abated, complete IRS Form 843, Claim for Refund and Request for Abatement. Alternatively, a letter detailing the facts and circumstances of the case could be sent. It is recommended to send this request certified mail return receipt requested.

We have used both the IRS Form 843 or just sent a letter detailing all of the facts.  Either way, be prepared to follow up. Sending in the Form 843 or a letter may not get the job done. Be prepared to follow up if need be.


State Considerations

In addition to the IRS, states will also assess penalties for failure to meet certain requirements. Like the IRS, some of these penalties may be able to be abated if you can prove reasonable cause. In Connecticut to get try and get a civil penalty abated, compete Form DRS-PW.

Have you had IRS penalties in the past?

If so, were you successful in getting them abated?

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Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has  recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.

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2 comments on “How to Get an IRS Tax Penalty Waived
  1. The burden of proof rests with you the taxpayer, to clearly demonstrate how the facts and circumstances prevented you from complying with your tax obligations, despite having exercised business care and prudence. To request abatement of penalties, you should write a letter to the IRS, clearly explaining the facts and the steps you have taken. Your reason for requesting abatement must be specific – something the IRS can consider as reasonable justification for abating the penalty, according to the parameters by which they work.