In Fiscal Year 2006 the IRS assessed a little over $27 Billion in penalties against taxpayers. They also abated over $10.6 Billion of these penalties due to Reasonable Cause and Other Errors. That's an abatement rate of 40%. (source: IRS FY 2006 Data Book)
An
abatement is when the IRS will forgive some or all of the penalties, which will
automatically include abatement of some interest. The reason some interest is
abated along with penalty is because the IRS charges interest on the penalties
also. Interest in itself is not abatable under the law, unless it was
erroneously assessed.
To qualify for an abatement you must have a reason or excuse for not filing and/or not paying that made it impossible for you to do so timely.
Some reasons and excuses are:
Incapacitating health problems of the person responsible
Theft , loss, stolen or destroyed records
Catastrophic events: fire, flood, death of taxpayer, war
Bad advice from a qualified tax professional (on a substantive issue)
Bad advice (in writing) from the IRS
and any other reason that incapacitates the taxpayer or responsible person.
If you feel you have a good excuse, request an abatement! It doesn’t hurt to try and you never know if you’ll get it unless you try. To request an abatement you simply need to write a letter to the IRS and explain your circumstances. Provide copies of proof or documentation where you can. Keep your original records!
You have the right to representation by an Enrolled Agent (EA), CPA or Attorney. You don't have to face the IRS alone, or at all!
Copyright © 2001-2008 by Gary W. Lundgren, EA