Most people start to cringe whenever you mention the IRS. They are one of the most dreaded agencies in the Federal Government. They are often billing you and taking your money rather than giving it back to you after you have paid your taxes throughout the year, right? While the IRS can certainly nail you with a tax bill, they can be forgiving as well. Mark Dicus & Company is here to talk about the different ways that you can beat IRS penalties when you are awarded one.
What are Typical IRS Penalties?
The IRS does certainly hand out penalties for those that don’t pay them the money that they have told you they owe. There are two different penalties that people often get awarded:
– Late Filing Penalty: For anyone that doesn’t file their taxes on time, you usually get a penalty. For those that are filing individually or for a C corporation, you will owe 55 of the total tax owed each month that it isn’t filed up to 25%.
– Late Payment Penalty: When you owe taxes and can’t pay them right away, you can set up a payment plan with the IRS to help you get the money paid. When you are late making these payments, you are more than likely going to get a penalty. If you are paying late, you can plan on getting fined .5% for every month that the tax goes unpaid up to 25% of the money owed.
How to Beat IRS Penalties
There are some ways that you can get around the penalties that are given to you by the IRS when you don’t file or are late to pay.
– First-Time Abatement: If this is the first-time that you have not paid or filed on time, you can fill out what is called a first-time abatement letter. This can only be used once though.
– Reasonable Cause: Even if this isn’t the first time you have had this issue with paying back the IRS, you can give them a reasonable cause to get you out of the penalty. Things like a natural disaster, death or injury are all going to fall under this category.
– Partnership Relief: If you have a partnership that isn’t an S corporation, and they have filed on time, you can ask for relief under Revenue Procedure 84-35.
What Should I Not Say to the IRS?
You should never be rude or persistent when you are dealing with the IRS and penalties. They are going to be far more forgiving when you have a reasonable cause for the error in judgement. Remember, that if you are able to use any of the reasons mentioned above to get out of the penalty, you can get your money back even if you have already paid it.