When you are late in paying your taxes, the Internal Revenue Service (IRS) can charge interest and assess penalties. If not addressed, the penalties can pile up and put you in a difficult position. A Bethesda IRS penalty abatement lawyer could explain the avenues for relief that might be possible in your case.

You will have fewer options if you wait too long to address a tax problem. A seasoned tax attorney could provide insight into penalty abatement while helping you with another tax issue such as tax fraud or an offshore disclosure.

How Tax Penalties Accrue

The IRS incentivizes tax compliance by imposing penalties on taxpayers who do not file or pay their taxes on time. The nature of the non-compliance determines the amount of the penalty. Securing the services of a Bethesda attorney could lead to IRS penalty abatement before significant penalties accrue.

Failure to File

The IRS imposes a penalty for each month a tax return is late: 5% of the tax owed per month, up to a maximum of 25%. Interest accrues on the total owed plus penalties until the taxpayer satisfies their debt.

Failure to Pay in Full

When a taxpayer files on time but does not pay all the tax they owe, the IRS assesses a one-half of 1% penalty each month on the outstanding balance. The maximum accrued penalty is 25% of the original unpaid balance.

Erroneous Returns

If a taxpayer files an erroneous return due to negligence or failure to follow IRS rules and regulations, or if they understate their tax, 26 United States Code § 6662 allows the IRS to impose a penalty equal to 20% of their tax liability. The IRS typically imposes this penalty only when it suspects an intentional or grossly negligent mistake.

FBAR Violations

A taxpayer must file the Report of Foreign Bank and Financial Accounts (FBAR) if they had more than $10,000 in assets in a foreign financial account at any time during a calendar year. Failing to file an FBAR subjects them to significant penalties. Negligent failure to file an FBAR could result in a penalty of $10,000 for each year an FBAR was required but not filed. If the IRS believes a taxpayer intentionally hid assets or willfully failed to report their foreign holdings, the penalty could be half the account balance or $100,000, whichever is larger.

Seeking Relief From Penalties

Taxpayers can seek abatement of penalties through an administrative waiver. Several administrative waivers are available and one might apply to a specific taxpayer’s circumstances.

The IRS will consider abating penalties if the taxpayer can show there was a reasonable cause for their non-compliance. A Bethesda tax penalty abatement attorney could demonstrate that a taxpayer was unable to pay or file on time due to specific circumstances, which might include:

  • Serious illness
  • Death of a family member
  • Destruction of records, such as in a flood or fire
  • Natural disaster
  • Incorrect advice from a tax professional or the IRS
  • Divorce
  • Business failure or home foreclosure

Taxpayers with a recent history of compliance—meaning they filed their returns on time and paid their taxes when due each of the past three years—could seek relief from penalties through the first-time abatement program. A lawyer is not needed for first-time abatement, but if an individual or business has a history of not filing or paying their taxes, legal counsel can provide value.

Work With a Bethesda IRS Penalty Abatement Attorney to Alleviate Your Tax Burden

IRS penalties can significantly increase your tax bill. If you failed to pay your taxes because you lacked the funds, penalties can make a challenging situation even more difficult to resolve.

A Bethesda IRS penalty abatement lawyer could work towards an administrative reduction or removal of the penalties (and any interest that accrued on top of it), and help you settle your tax matter with the IRS. Call today to discuss your situation with experienced tax counsel.

Attorney John Pontius

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, Fairfax, 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.

Client Reviews
John helped us with a DC tax audit and succeeded in getting us a "no change" final decision. The issues were related to two flow-through entities and the use of carry-forward operating losses -- something that the DC auditors struggled to understand and with which they did not have any...
Paul A
Mr. Pontius is extremely professional and was able to take care of my tax returns which includes international bank accounts quickly and at a very reasonable price. Would definitely recommend.
I received a fee this past November from the IRS for over $800 because of an error I made on my 2016 taxes. I called my cousin, John Pontius, and he immediately knew what steps needed to be taken. Thanks to him, the fee was cleared. A 10 minute conversation...
As an American citizen living in the Middle East my local banker informed me that I needed to file FBARs and report my worldwide income to the IRS. Through the recommendation of another attorney at an international law firm, I was introduced to John Pontius. Mr. Pontius efficiently and effectively...
Kareem S
John handled a difficult IRS lien for my client. He was excellent in getting the lien released so we could close on the property. I would highly recommend John .
Bobbie M
We were seeking tax advice with managing two properties, LLC, as well as some future financial planning. John responded to my call in a timely manner and was happy to answer our questions while referring us to specialists who can manage our accounts on a more regular basis.
Janelle M
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