IRS penalties and Interest Arise From the IRS Determining That the Tax Payer Has Unpaid Back Taxes

Typically you will be assessed with penalties and interest once the IRS notices you did not meet a filing deadline, or it realizes you have unpaid back taxes. It could also be likely that they are wrong for many reasons. Even if the IRS is right, sometimes penalties and interest can be abated. Typically an IRS Assessment Letter will tell you how long and how much you owe including any amount for tax penalities and interest.

The IRS has penalties for many different things and the amounts of those penalties vary for each particular item. There are five basic categories for penalties. These five categories are:

• Accuracy
• Fraud
• Failure to Pay Taxes
• Late Returns
• Combined Penalty
  
  Typically the most severe penalties are the fraud penalties. There are many different types of fraud penalties, but to give you an idea of how harsh this is, if you fraudulently underreported your income by $100,000, the IRS will fine you 75% of that underreported amount, so you total penalty will be $75,000, which will also include additional interest.
  
  
  

Reducing or Eliminating Penalties and Interest

One way to reduce penalties and interest is through abatement. Most of the time with an abatement, you will be able to eliminate the majority if not all of the penalties, but not the interest. Eliminating these penalties may lift a huge financial burden off of you. Most of the time the penalties make up 25% of the total tax debt amount owed, but can be up to 90% of the total amount owed.

Tax Professional to Remove IRS Penalties and Interest
Tax Professionals can be the best option for many people when dealing with a lot of money and complex tax problems.

Penalty Abatement
Eliminate penalties and interest if you have legitimate reason for falling behind and not paying back taxes owed on time.

File Back Taxes
Guidelines, steps and advice to follow when attempting to file your back taxes. Before you can negate penalties and interest you will need to file your back taxes.

Payment Plans
Setting up a payment plan with the IRS can sometimes be the easiest solution to dealing with back taxes. See what payment plan fits your situation the best.

Offer In Compromise
Settle IRS back taxes for a fraction of what is owed if you can prove you meet strict IRS specifications.

Delay Collections
If you just need more time to pay and want to delay the IRS collection system you can easily get extensions.