Individuals and businesses that earn an income above $12,500 in Maryland need to pay taxes to both the state and the federal governments. A failure to file a tax return or pay taxes can result in financial penalties. This can include the accumulation of interest on overdue accounts, as well as the institution of penalties that increase the overall tax burden. Thankfully, the Internal Revenue Service (IRS) utilizes a program that may allow first-time non-payers to avoid these penalties. Even if you do not qualify for this program, you might still be able to have these penalties dismissed or reduced with careful legal intervention from a quality tax lawyer.

A Rockville IRS penalty abatement lawyer could help taxpayers in Maryland ease their tax obligation while assisting with another sensitive situation.

Common IRS Penalties

One of the most common ways that someone might be penalized by the IRS is through the failure to file or pay their taxes. For every month that someone does not file with the IRS, they are assessed a penalty of 5% of the amount owed, with a maximum penalty of 25%. Even when an individual or business does file their returns on time but they do not pay the full amount that is due, they will be penalized 0.5% of the owed amount every month, with a maximum accrued penalty of 25%.

The penalties involved in not identifying foreign financial asset can be especially steep. A non-willful individual or business that does not file an FBAR to FinCen could be hit with a penalty of $10,000 per year of non-compliance. If their actions were deemed to be willful, however, then the penalty could rise to $100,000 or 50% of the account balance, and a criminal investigation is possible.

In order to eliminate a penalty, a taxpayer will need to establish reasonable cause, which can be difficult to meet. Speaking with a Rockville penalty abatement lawyer is the best way for someone to learn if they have enough evidence to establish reasonable cause.

The IRS First-Time Penalty Abatement Policy

A failure to file a tax or a failure to provide necessary payments can result in penalties. The IRS has the ability to enact penalties, charge interest on those penalties, and even seize assets to cover a tax bill through the implementation of a tax levy. Fortunately, for taxpayers with a history of making on-time payments, these steps may not be necessary.

The First-Time Penalty Abatement Policy allows taxpayers to ask for forgiveness on accrued tax penalties for failure to file and/or pay on time. However, this is only available if a taxpayer has made on-time tax payments in the past three years, has made all currently due payments or entered into a payment plan, and has filed a current tax return or extension. If they can demonstrate these facts, the IRS can forgive the penalties. A Rockville penalty reduction lawyer is not usually needed when a taxpayer wishes to file for first-time abatement. However, if they have retained legal counsel to help with a bigger controversy, then penalty abatement can serve as an additional service to the wider issue.

Penalty Forgiveness May Also Extend to Interest

Any time that the IRS institutes a penalty due to unpaid taxes, they are required by statute to charge interest. This interest accumulates for as long as the taxes remain unpaid. As a result, the penalties and interest that follow from a failure to pay taxes may even end up exceeding the tax bill itself. However, if penalties or the underlying tax itself is abated for whatever reason, then any interest that accrued on that abated portion is also eliminated. This does not eliminate the need to pay interest on the portion that remains.

Let a Rockville IRS Penalty Abatement Attorney Take the Lead

Tax controversies that affect individuals and businesses in Maryland can be both stressful and complex. If the IRS believes that you have underpaid on your taxes, or that you have failed to pay taxes at all, they may institute penalties that are subject to interest. These penalties can make the repayment of overdue taxes even more difficult.

The IRS’s first-time abatement policy allows taxpayers with a history of making payments the ability to request relief. This includes the forgiveness of penalties and the attending interest payments. A Rockville IRS penalty abatement lawyer might be able to help in the event that first-time abatement is unavailable to you. Reach out to an attorney today to get started.

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.
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