The IRS has over 148 different penalty types they can hit your clients with. Worse, the IRS can also charge interest and additional penalties on the original penalty. Penalties can be such a high percentage of overall tax debt - it generally makes sense to consider requesting the IRS remove or reduce penalties for your clients...in certain situations.

IRS penalties can often be reduced to ZERO in two ways which I share below and in my FREE downloadable report: 9 Secrets To Getting IRS Penalties Removed.

IRS Penalties Can Often be Reduced to ZERO in 2 Ways:

1.“First Time” Penalty Abatement.
This is a request for penalty relief under the IRS’s “fresh start initiative”.

2. Reasonable Cause Argument.
You can also request relief from penalties due to “Reasonable Cause”. The major ones include economic hardship, death or serious illness of a love one, unable to obtain records, and bad advice from a tax preparer, to name a few.

FIRST TIME PENALTY ABATEMENT
- Updated May 3, 2013 – (Generally Applies to 1040 tax)
- One-time consideration available only for taxpayers with a “clean” compliance records
- Must not have incurred Failure to File or Failure to Pay penalties for 3 years preceding the year you are requesting FTA on. (must review ROA)
- Can only request one period.
- You can request it verbally with ACS or to a Revenue Officer; Does not have to be in writing;
- If granted by ACS, it is usually approved on the spot.
- All returns must be filed, paid, or arranged (I.A.) to pay.
Practice Tip: Request it whenever you are setting up a streamline (Under $50,000 in liability) Installment Agreement.

REASONABLE CAUSE ARGUMENTS
Per the Internal Revenue Manual (IRM) Section 20 there are 9 main “Reasonable Cause” arguments to get penalties removed:

1. Death, Serious Illness, Unavoidable Absence
2. Fire, Casualty, Natural Disaster
3. Unable to Obtain Records
4. Mistake was made
5. Erroneous Advice or Reliance
6. Written/Oral Advice from the IRS
7. Ignorance of Tax Laws
8. Reasonable Cause/Ordinary Business Care and Prudence
9. Undue Economic Hardship

PENALTY ABATEMENT CHECKLIST
- Reasonable Cause (Per IRM Sec. 20) requests must be in writing
- Timing – the event must correlate to the tax years involved; and
- Supporting Documentation is Essential!

Get ALL my penalty abatement tips in my FREE downloadable report: 9 Secrets To Getting IRS Penalties Removed.