Taxpayers who make an effort to comply with the law, but are unable to meet their tax obligations due to circumstances beyond their control may qualify for relief from penalties.
After receiving a notice stating the IRS assessed a penalty, taxpayers should check that the information in the notice is correct. Those who can resolve an issue in their notice may get relief from certain penalties, which include failing to:
- File a tax return
- Pay on time
- Deposit certain taxes as required
The IRS offers the following types of penalty relief:
This relief is based on all the facts and circumstances in a taxpayer’s situation. The IRS will consider this relief when the taxpayer can show they tried to meet their obligations, but were unable to do so. Situations when this could happen include a house fire, natural disaster and a death in the immediate family.
Administrative Waiver and First Time Penalty Abatement
A taxpayer may qualify for relief from certain penalties if he or she:
- Didn’t previously have to file a return or had no penalties for the three tax years prior to the tax year in which the IRS assessed a penalty.
- Filed all currently required returns or filed an extension of time to file.
- Paid, or arranged to pay, any tax due.
Before asking for First Time Abatement relief, taxpayers can request that the IRS first consider the reasonable cause relief provision. This preserves access to the First Time Abatement, which taxpayers may only use every three years.
In certain situations, legislation may provide an exception to a penalty. Taxpayers who received incorrect written advice from the IRS may qualify for a statutory exception.
Taxpayers who received a notice or letter saying the IRS didn’t grant the request for penalty relief may use the Penalty Appeal Online Self-help Tool.
Common Penalties for Individuals
The Right to Pay No More than the Correct Amount of Tax
The Right to Challenge the IRS’s Position and Be Heard
The Right to Appeal an IRS Decision in an Independent Forum