Do you have a balance due with the IRS? If you do, it is likely that the balance includes penalties and interest. Included among the various penalties that may apply are penalties for late filing and for failure to timely pay the tax due. Under certain circumstances, each of these penalties can be up to a maximum of 25 percent of the unpaid tax. For example, if you had unpaid tax of $10,000 and the maximum penalties applied, the balance due with the IRS, before interest, could be approximately $15,000. As you can see, these amounts can add up quickly. There are options to obtain penalty abatement/waiver and for interest abatement. But not all taxpayers will qualify for relief. An experienced tax attorney can help you negotiate the potential abatement of the penalties assessed on your account.
There are three main avenues to obtain penalty abatement/waiver.
The IRS charges interest on all unpaid balances. Interest accumulates daily and is charged until the balance is paid in full. If any of the tax and/or penalties are reduced, the IRS will automatically reduce the related interest. Interest is statutory, however, and cannot be reduced or removed for reasonable cause or as a first time abatement. The only way that the IRS will reduce the amount of interest that you owe is if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act. To see if you may be entitled to interest abatement, you should consult with a tax attorney.
If penalties have been applied by the IRS to your tax debt, you need an experienced tax attorney who will explore your options for penalty abatement or other relief and can represent you in your dealings with the IRS.