A failure to pay taxes through the Internal Revenue Service (IRS) is a tax controversy that you must rectify. The IRS has a collection of tools at their disposal to acquire delinquent funds: they may garnish a person’s wages, place a lien on physical property, or even carry out a levy to directly seize assets.
Thankfully, a single failure to pay or file a tax return does not automatically mean that the IRS will impose penalties. While it is certainly within their power to do so, the law also provides for a first-time penalty abatement. If you have a large tax bill that is currently subject to another kind of tax examination and you wish to abate an undeserved penalty, you could accomplish that with a trustworthy tax lawyer. A Washington DC IRS penalty abatement lawyer might be able to help individuals, couples, and businesses explore their options regarding burdensome penalties.
Potential IRS Penalties
The IRS has broad powers to investigate alleged failures to pay taxes. If they believe that a failure to pay has occurred, they may issue penalties that add to the owed amount, place liens on property, or place a levy on assets to make up for a delinquency. No matter the exact circumstances that have led to this situation, a Washington DC penalty reduction lawyer could help to work towards a solution.
If someone fails to file a tax return, they will be penalized 5% of the amount owed for every month that it remains delinquent, maxing out at 25%. If they fail to pay the full tax amount owed, they are penalized at 0.5% of the delinquent amount per month, again maxing out at 25%. If there is an Accuracy Related Penalty, they must pay an additional 20% of the underpayment that was due to negligence or disregard of the rules. Non-willful failure to file an FBAR could lead to a $10,000 yearly penalty, with the potential to go up to 50% of the highest aggregate account balance per year. If this is not addressed, it is possible to see the penalties rise to an excess of $100,000, which is why it is important to find a lawyer early in the penalty abatement process.
The First-Time Penalty Abatement Program
While the IRS can be strict in demanding the payment of taxes, they also realize that there is room for flexibility. A clear example of this dynamic is the presence of the First-Time Penalty Abatement Policy. This policy states that the IRS may waive penalties resulting from many tax controversies if a taxpayer can demonstrate that:
- They have filed tax returns for the previous three years, or were not required under the law to do so
- They have currently filed all relevant tax returns or requested an extension
- They have paid all due taxes or made arrangements to do so
The process involves filing Form 843, which a taxpayer can do on their own without the aid of a lawyer. This form allows them to identify the overdue tax that has resulted in a penalty and provide an explanation for non-payment. Along with this form, they should provide proof that they qualify for the program under the criteria listed above.
If this is a recurrent issue or if it is in conjunction with another tax controversy, a local IRS penalty abatement attorney could help demonstrate reasonable cause and produce proof that there was no willful neglect. If a penalty is abated, any interest that accrued on that specific penalty can also be abated as well. The IRS generally charges 3 or 4% on the tax balance.
Reach Out to a Washington DC IRS Penalty Abatement Attorney Today
If you are facing potential penalties for the non-payment of due taxes, you may be wondering what your options are to avoid IRS penalties.
Thankfully, a single allegation of non-payment will not necessarily result in any permanent penalty and most taxpayers can correct this mistake on their own. If you have a larger tax burden ($50,000 or more), a Washington DC IRS penalty abatement lawyer could show how your past record of payment, current payment of due tax, and accommodations for future payment make you eligible for a reduction or removal of penalties. Contact a lawyer today to discuss your options.