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IRS Penalty Abatements and Reasonable Cause

IRS Penalty Abatements As noted previously, the purpose of (assessing) a penalty is to encourage voluntary compliance. “Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” (IRS.gov, “20.1.1.2.1 Encouraging Voluntary Compliance,” 8/14/2013). The taxpayer supports the tenets of the Internal Revenue Code in achieving voluntary compliance when he or she makes […]

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IRS Penalties – Part Four

Tax Fraud Penalties The Internal Revenue Service considers the filing of a false tax return to be fraud, which is a criminal offense. Taxpayers convicted of fraud or aiding another taxpayer in committing tax fraud will be “subject to forfeiture of property and/or jail time” (Wikipedia.org, “IRS Penalties,” 9/11/2013). Taxpayers are convicted and sentenced through […]

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IRS Penalties – Part Three

Penalties and Failure to Provide Foreign Information Taxpayers who own shares in a controlled foreign corporation are required to file Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. This form must be filed for each controlled foreign corporation. The penalty for failure to file timely ranges from $10,000 to $50,000 […]

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IRS Penalties – Part Two

Accuracy Related Penalties The IRS may assess an additional penalty for an amount reported on a taxpayer’s income tax return that is later adjusted but results in a tax increase. “This penalty of 20% or 40% of the increase in tax is due in the case of substantial understatements of tax, substantial valuation misstatements, transfer […]

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Types of IRS Penalties – Part One

Underestimate and Late Payment IRS Penalties It is possible for a taxpayer to underestimate the amount of tax due, because estimations are based upon predictions. A taxpayer is required to withhold tax or make quarterly estimated tax payments by the end of the year. The taxpayer must estimate this amount. There is an IRS penalty […]

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IRS Penalty Information

Total failure to file a tax return and pay all balances owed will result in the IRS charging an IRS penalty, which is usually “five percent of the tax owed for each month, or part of a month that your return is late, up to five months. If your return is over 60 days late, […]

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How IRS Interest is Calculated

You are required to file a return if you have earned income in the previous year. You are also required to pay all tax by the due date to avoid IRS interest and penalty charges. The official due date to file and pay taxes is April 15. This is the “deadline for most people to […]

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More on IRS Interest Abatements

According to section 20.27.1 Interest Abatement and Suspension Overview, reasonable cause can never serve as the basis for an IRS interest abatement (IRS.gov, 8/14/2013). With this in mind, the interest on a tax liability will accrue from the return due date until the taxpayer pays the tax obligation in full. Exceptions to the law may […]

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First Time Penalty Abatement Program

The First Time Penalty Abatement Program relief is a one-time consideration that is applied to a first-time penalty charge. The penalty relief is based upon the taxpayer’s compliance history. Taxpayers may qualify for First Time Penalty Abatement Program relief by having their penalties for filing and paying late abated. Abatement applies under general conditions. For […]

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First Time Penalty Abatement Waiver Program

Introduction to the First Time Penalty Abatement Waiver Program Taxpayer penalties cause a lot of discord among my collection clients, who do not feel that it is fair that they pay a significant penalty to the IRS on top of their balance owed. However, penalties serve a significant purpose in encouraging taxpayers to comply with […]

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