IRS Tax Penalty
The Internal Revenue Service IRS imposes an IRS tax penalty for different reasons. Some of the most common irs tax penalties are:
- Failure to file penalty
- failure to pay penalty
- underpayment penalty
- negligence penalty
Notably, the IRS imposes interest by law. The IRS is powerless to remove interest unless calculated incorrectly. Conversely, the IRS will pay interest to you if they owe you money.
Can penalties be removed?
Importantly, the IRS removes penalties upon the taxpayer can demonstrating reasonable cause. Otherwise, the taxpayer may request a first time penalty abatement, if they have had a good history for the past three years.
If you receive an IRS notice, you should request that the IRS remove the penalties for reasonable cause and for first time penalty abatement. We usually do this while paying the undisputed amount of income tax and interest.
Penalties during an audit
I would not agree to penalties during an audit, especially if the taxpayer had a good history. Do not agree to an audit report that includes penalties. If you have already agreed to penalties, you could re-open the audit.
If you have any questions, please contact us.