IRS Penalty Abatement Help in Montgomery County, Texas
Quick Answer: IRS penalty abatement removes or reduces penalties added to your tax debt. The most common relief is First Time Abatement (FTA), which removes penalties if you have a clean compliance history for the past 3 years. Reasonable cause abatement is available for circumstances beyond your control.
Penalty abatement is a request to have IRS penalties removed or reduced from your tax account. The IRS adds penalties for late filing, late payment, and accuracy issues, which can add 25% or more to your original tax debt.
Eligibility Requirements
- First Time Abatement: No penalties in prior 3 years, all returns filed, payments current or arranged
- Reasonable Cause: Circumstances beyond your control (illness, disaster, death in family)
- Statutory Exception: IRS error, erroneous written advice from IRS
- Administrative Waiver: IRS-initiated relief programs
The Process
- 1Identify which penalties qualify for abatement
- 2Determine the best abatement strategy (FTA or reasonable cause)
- 3Gather supporting documentation
- 4Submit request by phone (FTA) or in writing (reasonable cause)
- 5IRS reviews request
- 6If approved, penalties removed from account
Expected Timeline
Phone requests for FTA: immediate; Written requests: 30-60 days
Advantages
- Can significantly reduce amount owed
- First Time Abatement is straightforward
- Interest on penalties also reduced
- No application fee
- Can be combined with other resolution options
Considerations
- Only removes penalties, not original tax or interest
- Reasonable cause requires documentation and explanation
- First Time Abatement only available once
- Not all penalties qualify
- May require appeal if initially denied
Frequently Asked Questions
What is First Time Abatement?
First Time Abatement (FTA) is an administrative waiver that removes failure-to-file and/or failure-to-pay penalties if you have no penalties in the prior 3 tax years, have filed all required returns, and are current on payments or have an arrangement.
How much can penalty abatement save?
The failure-to-file penalty is 5% per month up to 25%, and failure-to-pay is 0.5% per month up to 25%. Combined, penalties can add 50% to your original tax debt, all of which may be removed through abatement.
Can I request penalty abatement multiple times?
First Time Abatement is a one-time relief. However, you can request reasonable cause abatement for other tax years if you have documented circumstances that prevented compliance.
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