It is axiomatic that individuals and businesses that owe federal taxes are required to file tax returns and pay any federal taxes owed by the specified deadlines. A failure to file a tax return, pay taxes on time, or make a required federal tax deposit can result in significant penalties. In certain circumstances, however, a taxpayer who incurs a penalty may be eligible for relief through a penalty abatement. If you received a penalty due to a failure to file a return or pay your taxes on time, it is critical to engage a skilled tax attorney to analyze your options for seeking relief from the penalty. The Los Angeles tax lawyers at Enterprise Consultants Group, LLC can assess the circumstances that caused you to incur a penalty and determine if you may be eligible for an abatement. We assist parties nationwide in seeking a penalty abatement.Eligibility for First-Time Abatement Waiver
Due to unforeseen circumstances, neglect, or mere forgetfulness, taxpayers in Los Angeles or elsewhere in the U.S. sometimes miss tax deadlines. Regardless of the reason for failing to comply with deadlines, the IRS strictly construes the Internal Revenue Code and penalizes taxpayers for a failure to file a tax return, a failure to pay taxes, or a failure to make a federal tax deposit within the time specified by law. Taxpayers may be granted administrative relief from any penalties incurred, however, if they meet specific criteria.
First, the taxpayer must show that either they were not required to file a return in previous years, or they did not incur any significant penalties for the three tax years prior to when the penalty was imposed. Estimated tax penalties are not considered prior penalties. A taxpayer’s request for an abatement should not be rejected due to penalties assessed more than three years prior to the subject tax year, or during subsequent tax years. The taxpayer must also show that they either filed any return that is currently due or filed an extension of time to file the return. Lastly, the taxpayer must show that they either arranged to pay or paid any taxes that are due. In cases in which a taxpayer was orally provided with incorrect advice from the IRS, the taxpayer may be entitled to other administrative relief.
It is important to note that a penalty assessed for a failure to pay taxes continues to accrue until the taxes owed are paid in full. Therefore, in most cases involving a failure to pay penalties, it is advantageous to wait until the taxes owed are fully paid before requesting relief. Additionally, if an unpaid balance remains on the taxpayer’s account, the balance will continue to accrue interest until the balance owed is paid in full. If the IRS grants a taxpayer’s request for relief, however, upon the reduction or removal of the penalty, any interest charged on the penalty will be reduced or removed as well. Tax penalties can be substantial and can detrimentally affect a taxpayer's finances. If you were assessed tax penalties, it is vital to consult a skilled attorney to determine whether you may be able to obtain a penalty abatement.Abatement for Reasonable Cause
If a taxpayer can establish a reasonable cause for failing to meet their tax obligations, they may be granted relief from penalties as well. The IRS will weigh any legitimate reason for failing to file a return, pay taxes, or make a federal tax deposit when due. Reasons such as fire, death, or incapacitation may be grounds for relief. However, a lack of funds to pay taxes, in and of itself, is not a reasonable cause. The IRS will analyze factors regarding when the taxpayer became unable to pay and any actions that the taxpayer took to file or pay the taxes owed to determine whether relief may be appropriate.Meet With a Seasoned Tax Lawyer to Discuss Your Eligibility for a Penalty Abatement
If you sustained a tax penalty, you should meet with a seasoned tax attorney to discuss whether you should seek an abatement. At Enterprise Consultants Group, LLC, we are proficient in seeking abatements for individuals and businesses and can help you seek relief from any penalties that you have incurred. From our office in Los Angeles, we assist taxpayers seeking abatements throughout the U.S. We can be reached at (800) 575-9284 or through the online form to schedule a meeting to discuss your options.