The Internal Revenue Service (IRS) lodges monetary civil penalties against taxpayers for various reasons. You may have forgotten to file your taxes, forgot to pay them, filed inaccurate information, or made an error on your foreign financial account filing. Although the IRS is quick to levy penalties, penalty abatement may be available if you qualify. A trustworthy tax lawyer could help you determine if this is possible.
The IRS is not going to give you an unsolicited break but may be amenable if you meet the criteria and provide adequate documentation. An Alexandria IRS penalty abatement lawyer could explain the fines you received and the steps you need to take to eliminate them. This process is generally done as a supplement to a larger tax controversy.
Each year, the IRS sends automated notices to thousands of taxpayers who fail to file or pay taxes on time, with proposed penalties. If the failure is a taxpayer’s first offense, and they take the initiative in paying what they owe, they may be eligible for first-time penalty abatement. They can achieve this without the aid of a lawyer.
If legal counsel is needed, a taxpayer could get help in raising a “reasonable cause” defense or ask for an administrative waiver, which the IRS should grant if a natural disaster precluded someone from filing. The most frequently raised defenses that have been successful in abating failure to file or failure to pay penalties are:
The failure to pay penalty can be reduced for taxpayers who agree to make payments in periodic installments. Usually, the initial penalty can be abated, and the penalty that continues to accrue until the taxes are fully paid can be abated once the debt is satisfied. Anyone in this situation should talk to an Alexandria IRS penalty abatement attorney to understand the criteria they must meet.
The IRS may notify a taxpayer of an accuracy-related penalty if it suspects the taxpayer has underreported income, overstated deductions, or acted negligently, such as deducting a dependent that they should not have. The problem could occur if the taxpayer forgets to attach a Miscellaneous Income Form 1099 with a tax return, which could trigger an accuracy-related penalty notice. The Accuracy-related penalty is calculated as 20% of the tax that was underreported.
Reasonable cause defenses are available, such as relying on an inexperienced tax preparer, incorrect information reported by an employer, the taxpayer’s knowledge of the law, and math calculation mistakes. An IRS penalty abatement attorney could help an individual or business show that their mistake was reasonable and that they should be relieved of the penalty.
Taxpayers who maintain bank and brokerage accounts outside the U.S. must file a Report of Foreign Bank and Financial Accounts (FBAR) at the same time they file their tax returns. However, the FBAR report is filed through the Financial Crimes Enforcement Network (FinCEN) instead of the IRS. Failing to report overseas financial information can result in civil penalties.
A penalty abatement attorney works with Alexandria taxpayers who are delinquent in their FBAR filings by showing the IRS that the foreign financial accounts were either reported properly on IRS tax forms or the taxpayer has reasonable cause for noncompliance. It is important to show the taxpayer did not willfully disregard their duty to file.
The IRS levies civil penalties when they believe taxpayers have not complied with their reporting duties for U.S. and foreign-derived income. You must meet specific criteria to qualify for a reduction or dismissal of the fines.
Our job is to satisfy IRS requirements and understanding the standards it uses to qualify a mistake as penalty-worthy. An Alexandria IRS penalty abatement lawyer could work with you to craft a reasonable cause defense and arrange installment payments for your back taxes. Schedule a consultation with us to learn more.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Vienna, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.