Is it Possible to Remove or Reduce IRS Tax Penalties?

remove irs tax penalties

If you have been charged with IRS penalties in addition to the back taxes that you already owe, there are several different routes you can take to reduce your liability and remove IRS penalties. Even if you are not eligible for IRS penalty removal, there are some options that may suit your situation.

Options for Removing or Reducing Tax Penalties

Penalty abatement enables you to remove or reduce some or all of the penalties and interest that you have accrued, but it does not rid you of your original tax bill. If you cannot afford to pay the IRS, you must deal with that situation separately from the penalty abatement process.

For many people, abatement removes the majority of the penalties filed against them but does not remove the interest that has accrued. Still, having only the penalties removed is better than having nothing removed at all, and if given this option, it is recommended that you take full advantage. In many cases, penalties comprise up to 25% of the total amount owed, so removing this from your account can alleviate a rather hefty financial burden.

If you agree that you owe money but are unsure of why penalties have been assessed to your account, it still makes sense to file for penalty abatement. An important thing to note is that if you apply for penalty abatement and the IRS agrees to remove the penalties against you, you must be prepared to pay off your tax debt in full.

Do I Qualify for Penalty Abatement?

To qualify for penalty abatement you must convince the IRS that you should not be held liable for this additional money. Some examples of such reasons that will give you a good chance of receiving penalty abatement include: a serious sickness; a family problem, such as a divorce; the destruction of important tax records; hiring a tax professional who gave you harmful advice; a natural disaster; or long term unemployment. If you have faced any of these issues, you have a higher chance of getting your IRS penalties removed.

How to File for Penalty Abatement

To remove IRS penalties you will need to file for penalty abatement. The process is simple and you have three options:

  1. Send a letter to the IRS explaining your situation and requesting a refund of the penalties that have been charged.
  2. If you would rather not write a letter, you can call the IRS and request to speak directly with a representative who handles these cases.
  3. IRS Form 843 is used specifically to request penalty abatement. You can follow the steps outlined on this form to get started.

In short, it is possible for you to remove IRS penalties as long as you are able to prove to the IRS that you have a valid reason for incurring the penalties in the first place.

Tax Penalties Help & Related Topics

Back Taxes Frequently Asked Questions
Common questions taxpayers have about back taxes and the different problems and situations that arise from owing or not filing taxes.

Penalty Abatement
Understand how penalty abatement works, what the requirements are and how to file for it.

Sample IRS Penalty Abatement Letter

If you are looking to remove tax penalties it is required that you send a letter to the IRS that details the reason why you should not be held liable for the penalties. Here is sample letter.

Help Abating IRS Penalties

If you need help to remove your tax penalties, our partnered tax professionals can quickly analyze your situation and see if you qualify and make the proper filings for you. Find out more on how this service works.

What is the Failure to File Penalty?
Do you have “reasonable cause” for failing to file and pay your taxes? Here are details how the failure to file penalty is calculated and how it can be reduced or removed.

What is the Failure to Pay Penalty?
Understand how to calculate the penalty for not filing your taxes, what the maximum penalty is, and what happens if fraud or negligence is involved.

IRS Late Payment Penalty
The IRS charges penalties if you don’t pay your taxes on time. The penalty can be small if taxes were filed but if taxes were not filed then the penalties will be much greater. Here are details on what the penalties are for late payment of taxes.