The IRS can impose multiple kinds of penalties on taxpayers who fail to file or pay their taxes. If you fail to pay or file your taxes by their respective due dates, it’s likely you’ll be penalized by the IRS. If you are facing tax penalties, the good news is you can have some or all of the penalties waived or abated through a formal penalty abatement request. In order to do this, you’ll need the help of a skilled penalty abatement attorney. In order to have your penalties lifted, our experienced attorney at Morgan Sebastian Law will have to establish there was reasonable cause for why you failed to meet your tax deadline. Here is some important information to know about penalty abatement in California.
What Are IRS Penalties?
Each year, many people fail to file or pay their taxes and falsely assume there will be no penalties. However, the IRS enforces penalties on individuals who do not meet their tax deadlines. In fact, you can get an additional 25% of what you owe if you fail to pay or file your taxes. This penalty can be even more severe for payroll tax discrepancies. While there are over 140 different kinds of penalties the IRS can impose, the three most common types of penalties include: failure to file (FTF), Failure to Pay (FTP), and Failure to Deposit (FTD).
Failure to File Penalties
The IRS may hit you with a failure to file penalty if you fail to file your taxes by the due date or if applicable, an extended due date that was requested and approved. The amount of this penalty will vary depending on the situation. However, there is a minimum penalty that will be applied to tax returns filed over 60 days late. While amounts will vary, taxpayers can end up being subjected to a penalty of up to 25% of the taxes they owe.
Failure to Pay Penalties
The IRS may impose a failure to pay penalty when you don’t pay the taxes you owe in full by the due date. The due date for tax payment is April 15. Many people are assigned this penalty because they did not understand or know the due date for their taxes. It is important to note that even if you get an extension, it doesn’t extend your time to pay. This means you must still pay your tax bill by April 15, or you could face the FTP penalty. The amount of the penalty will depend on how late your tax bill is. Typically, the penalty increases with each month, capping out at 25% of the unpaid bill.
Failure to Deposit Penalties
The failure to deposit penalty is imposed on businesses who do not deposit tax correctly within a certain time period. The IRS sends any business with employees a letter outlining its federal tax deposit schedule. This lets the business know when and how to make required federal tax deposits. If the business fails to make these deposits as requested, they can be hit with the FTD penalty. The typical rates of these penalties range from 2-10%.
What to Know About Waiving IRS Penalties
If you have been served with an IRS penalty, you can apply to have the penalties reduced or waived. A skilled tax lawyer can help you find tax relief or penalty abatement. Here’s a look at some of the tax relief options you may be eligible for:
- First Time Penalty Abatement. While relief under this option is limited, it can provide significant relief. To qualify, you must meet certain requirements, such as meeting the deadlines with no penalties for the past three years and arranging to pay any tax that is due.
- Reasonable Cause Penalty Abatement. If your tax lawyer can establish there was reasonable cause for your failure to pay or file your taxes, you may qualify for a reasonable cause penalty abatement. Reasonable cause can include serious illness, natural disasters, or other disturbances.
- Penalty Relief for Business. If your tax discrepancies are business-related, you may be able for tax a specific business tax relief abatement.
Ultimately, working with a skilled tax lawyer is the best way to understand the relief options you have.
Work with a Trusted California Penalty Abatement Lawyer
At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of your unfiled return or unpaid tax bill. As a trusted tax resolution lawyer, Attorney Becky has years of experience representing individuals who failed to file their tax returns. She can provide you with the professionalism and peace of mind you deserve when dealing with the IRS. You can count on her to collect all the documentation needed to achieve a favorable tax resolution.