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All You Wanted to Know About Penalty Abatement

Penalty abatement is a form of tax debt relief you can avail to significantly reduce the total tax you owe to the IRS.

What is Penalty Abatement?
If you have a tax debt, the IRS will calculate penalties and interest on the amount owed. The penalties include a ‘failure to file’ penalty if you have failed to file your returns on time (including extensions), a ‘failure to pay’ penalty if the tax amount has not been paid in full and which is calculated on the basis of the amount you owe. These two penalties are charged on a monthly basis for the entire period until resolution. Further the IRS charges a daily interest on the tax amount you owe. All in all, the each penalty may contribute up to 25% of your total tax bill.

If your failure to pay taxes has been due to financial difficulties, such difficulties are further compounded by the penalties, which continuously keep adding to the total tax debt. So penalty abatement is an option you should definitely consider to achieve some degree of tax debt relief. As professional enrolled agent, Mike Habib can guide you in this matter if you do not feel confident enough to handle it on your own.

The Rationale Behind the Penalty Abatement Option
The penalty abatement option indicates a surprisingly human side of IRS you would not have believed existed. The IRS or its appeal officer wants to know the reasons you failed to file your returns or pay the tax and if the IRS finds that these reasons were truly beyond your control, they may abate penalties. Naturally, the IRS will not take your word for it (they never do) and you need to have sufficient documentary support that proves your reasons. Also the burden of proof is on you to show that you exercised “ordinary business care and prudence”, but failed to meet your tax obligations due to external issues beyond your control. Depending on your specific circumstances, the IRS or the appeal officer may approve penalty abatement in full or to a certain extent.

When is a Penalty Abatement Right for You?
You can request for penalty abatement if you failed to meet your tax obligations due to the following reasons
– Any family crisis, such as divorce or major illness of a close family member
– Death of close family member like parent, spouse or child
– Any event which caused your absence from active business life such as a personal illness or hospitalization, time spent in rehab or abroad due to compelling reasons.
– Destruction of tax records due to fire, flood or any other accidental or natural disasters.
– Incorrect advise from a tax professional or even an IRS agent
– Theft on premises and or embezzlement of funds that crippled the organization financially.
Each situation is different and it is possible that you may have another valid reason that qualifies you for penalty abatement, not listed here. As an experienced professional enrolled agent, Mike Habib can help you identify genuine causes and put them forth in the desired format to the IRS along with requisite evidence to secure highest possible penalty abatement.

How to File for IRS Penalty Abatement
i. Write a clear communication to the IRS or the appeal officer in response to the notice you have received listing the reasons why you feel you are not to be held responsible for the penalties and enclose appropriate supporting documents, while sending it to the IRS.
ii. Schedule a face to face meeting with the IRS, if you feel more comfortable with this approach.
iii. You can file for the penalty abatement by filling the IRS form 843.
iv. Retain us to carry out the abatement task for you and represent you before the IRS for securing penalty abatement.

And remember, if your penalty abatement request is accepted by the IRS, you may have to pay your actual tax liability in full.

If you want professional help to determine whether you qualify for penalty abatement and also to represent your case to the IRS, visit www.myirstaxrelief.com. Mike Habib, an IRS licensed enrolled agent and founder of our tax relief company will personally review your case and offer his input. Mike works specifically with individuals and small businesses to make sure that they get the maximum possible penalty abatement, which could considerably reduce their tax debt.

About Mike Habib, EA NTPI Fellow®:

Mike Habib, EA Dave Ramsey (2012-2019) (2012-2019) Tax Services ELP Endorsed Local Provider Tax Expert

Mike Habib is an IRS licensed Enrolled Agent who owns and operates a specialized tax services boutique firm, and can abate your tax penalty for reasonable cause, serving clients in various metro areas such as Los Angeles, Whittier, Pasadena, Glendale, Burbank, Orange County, Riverside, Palm Springs, San Bernardino, Palmdale, Bakersfield, New York, New Jersey, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, San Jose, Detroit, Jacksonville, Indianapolis, San Francisco, Columbus, Austin, Memphis, Fort Worth, Baltimore, Charlotte, El Paso, Boston, Seattle, Washington DC, Milwaukee, Denver, Louisville, Jefferson, Las Vegas, Reno, Hempstead, Tucson, Nashville, Davidson, Portland, Tucson, Albuquerque, Santa Fe, Anchorage, Atlanta, Long Beach, Fresno, Sacramento, Mesa, Kansas City, Cleveland, Virginia Beach, Omaha, Miami, Oakland, Tulsa, Honolulu, Minneapolis, Pittsburgh, Colorado Springs, Arlington, Wichita, Birmingham, Montgomery, Tampa, Orlando.

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Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike!April S.
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him!Joe and Deborah V.
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation!Marcie R.
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied!Marshall W.
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends.Nancy & Sal V.
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