Know the Reasons for Abating Tax Penalties

When you are in tax trouble, interest, penalties, and fines accrue during the entire period you owe. This may seem foolish. If you could not pay the taxes you owed, what makes the Internal Revenue Service think you can afford to pay all of these building fines, penalties, and interest?

The answer is simple. The IRS knows nothing of your personal situation. The fines, interests, and penalties attached to your overdue taxes are automated. A computer generates the numbers and spits them out without regard. The IRS can, however, reduce or eliminate these extra charges if you can show cause.

Reasonable cause, under Internal Revenue Standards can apply if you were ignorant of the law. If you or the Internal Revenue Service made a mistake in calculating the amount of taxes you owe, you could apply reasonable cause.
If you just plain forgot, you might still convince the Internal Revenue Service that your forgetfulness is reasonable cause to lower or eliminate the interest, fines, and penalties added to your past due amount. Causes like unavoidable absence, serious illness, or death are good reasons to suggest reasonable cause.
The inability to procure records could justifiably delay your capacity to pay and be grounds for a reasonable cause claim.

If you received incorrect advice from a tax expert, you can claim reasonable cause. If you received advice in error from The Internal Revenue Service, you have a claim for reasonable cause. If you experienced a disturbance beyond your control like a natural disaster, fire, or casualty, these events make for a reasonable cause claim. Experiencing an act of God justifies a reasonable cause argument.

The Internal Revenue Service will, in reality, accept any reason (even I forgot) as long as you can demonstrate that you used reasonable business care and still were unable to pay.

If you receive an IRS notification for back taxes, you can either write back requesting an abatement, or file Internal Revenue Service form 843. When you do this, it is really good if you can include a check for the back taxes, not interest, penalties, or fines. Indicate that the payment is only for the taxes and not for any of the interest, fines, or penalties. In this package include a copy of your back tax notification and any proof that will substantiate your reasonable cause claim. Make a note on the check as well that the payment is for taxes owed only. At the least, you will stop accruing interest, because the tax is paid.

Please note that you might receive more billings before your request for abatement is accepted or denied. If your abatement request is denied, you cannot file again on the same grounds.

If you are unable to pay your taxes in time, IRS will be behind you with a lot of interest and penalties. But do you know people have got away with just simple excuse - I forgot! No, it is not that easy but there are some tax abatement strategies. Use them properly and get relief. Chintamani Abhyankar explains how.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.