5 Ways to Minimize Your IRS Penalties

Posted by Nathan Isabelle on Jan 24, 2017 8:30:00 AM
Nathan Isabelle
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Many people fear the wrath of the IRS, especially during tax season. Penalties for late-filing, late-payment, accuracy related penalties, or estimated tax penalties can make filing your taxes seem like a daunting task. 

Of course, my best advice is to work with a reliable, knowledgeable CPA who can help you avoid penalties from the start. However, if you find yourself facing penalties this year, here are a few tips for minimizing the damage:

  1. First Time Penalty Abatement.
    If you have had no penalties for the past three years, and have a history of filing and paying on time, you might be able to get your penalty reduced or revoked.
  2. Reasonable Cause.
    The Internal Revenue Manual includes a list of circumstances under which a taxpayer may be forgiven for late filing or late payments, including death, serious illness, fire, casualty, and other circumstances.
  3. Installment Agreements.
    Establishing an installment payment plan may help to get your failure to pay penalty reduced.
  4. Penalty Non-Assertion Request.
    If you know you're going to be filing late, attaching a penalty non-assertion request to your return can help. Be sure to quote any applicable sections of the Internal Revenue Manual in your request.
  5. Office of Appeals.
    If the IRS denies your request, you can contact the Office of Appeals, who may be more willing to negotiate to reduce your penalties.

Your CPA can help you utilize these and other strategies to avoid IRS penalties. If you're not sure where to start, I'm happy to walk you through the options that meet your specific needs. Feel free to contact me directly anytime, or leave a comment below.

Topics: Tax