March 7, 2017

If you owe money to the Internal Revenue Service, you may be concerned about debt payment, penalties, and interest. Some taxpayers qualify for a penalty abatement, which is a waiver of the charges and fees incurred from either late or non-payment and filing of a person’s income tax. However, the IRS is very selective when awarding penalty abatement to a taxpayer.

If you can establish that your failure to file or pay your taxes resulted from justifiable circumstances beyond your control, you may be eligible for a partial reduction or complete elimination of your tax penalty. Such factors include:

Prolonged unemployment

If you are undergoing financial hardship and can provide ample evidence to show your finances prohibited you from paying your taxes, you may qualify for penalty abatement. Documents such as letters of termination or bank statements may be used to strengthen your case.

Unavoidable absence

If you were in in prison, in rehab, in combat overseas, or being held hostage in another country at the time you should have been filing your taxes, you may also qualify for penalty abatement. You must support your claim with documentation. Of course, you cannot use being away as an excuse if you were overseas willfully on a vacation.

Natural disasters

If a natural disaster such as a fire, flood or hurricane prevented you from making tax payments on time, you may apply for penalty abatement. The IRS typically issues announcements on how to file for abatement if you reside in an area with a recorded natural disaster.


You may apply for penalty abatement if you have been a victim of theft and your tax records were lost or stolen as a result. Evidence for such a scenario includes the police report from when the incident was reported or claim documentation from your insurance policy.

Serious illness

If you suffered a major illness and required hospitalization at the time you were supposed to file or pay your taxes, the IRS will consider you for penalty abatement. You must be able to show supporting documents of your condition and hospitalization during this period of time.

Death of a loved one

The IRS will consider your application for penalty abatement if there was a death in the family. You must, however, be ready to explain how or why the death directly affected your ability to pay taxes. You must also present the death certificate to the IRS as proof.

Faulty advice from a tax professional

Reasonable cause for penalty abatement may include faulty advice from a tax professional, whether this information was a mistake or was intentionally or maliciously given to you. You must be able to show documentation to support your claim.

Incorrect information from the IRS

Though it is uncommon, there are times the IRS issues faulty advice or incorrect information in writing, over the phone, or in person, thus leading to taxpayers making incorrect payments or missing deadlines. You may qualify for penalty abatement if you can prove any documentation given to you by an IRS employee and state that you were merely following his or her advice. Note that such case can be difficult to prove and deal with.

The IRS understands there are occurrences that can change our plans in an instant, and so they will not penalize taxpayers with legitimaate reasons for non-compliance. If you do not fall under one of the reasons above, trust that the IRS will still closely examine the situation. Of course, they will require solid evidence before waiving any penalties.

If you have reason to believe that you qualify for penalty abatement, consult with a tax professional with experience in abating penalties.

Categories: Tax Penalties