TAX AND CIVIL PENALITIES WILL IRS EVER ABATE OR REMOVE? : Lawyer Directory

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TAX AND CIVIL PENALITIES WILL IRS EVER ABATE OR REMOVE?

by Victorianne C. Musonza (Maxwell Law Firm, PLLC)

BY

WHY ARE THE ASSESSED

IRC Section

Type of Penalty

Reasonable
Cause Relief

Other
Relief

IRC 6651(a)(1)

Failure to File tax return

Yes

Yes

IRC 6651(a)(2)

Failure to Pay tax when due

Yes

Yes

IRC 6651(a)(3)

Failure to Pay within 10 Days of Notice of Additional Tax Due (Notices issued prior to 1/1/1997)

Yes

Yes

IRC 6651(a)(3)

Failure to Pay within 21 Days of Notice of Additional Tax Due (10 business days if amount is $100,000 or more) (Notices issued after 12/31/1996)

Yes

Yes

IRC 6651(f)

Fraudulent Failure to File

No

No

IRC 6652(a)(1) **

Failure to File Certain Information Returns

Yes

Yes

IRC 6652(c)(1)

Failure to File Annual Return by Exempt Organization

Yes

Yes

IRC 6652(c)(2)

Failure to File Returns under IRC Section 6034 or 6043(b)

Yes

Yes

IRC 6652(d)(2)

Notification of Change in Status of a Plan

Yes

Yes

IRC 6652(e)

Information Required in Connection with Certain Plans of Deferred Compensation—Form 5500

Yes

Yes

IRC 6652(h)

Failure to Give Notice to Recipients of Certain Pension, etc., Distributions

Yes

Yes

IRC 6652(i)

Failure to Give Written Explanation to Recipients of Certain Qualifying Rollover Distributions

Yes

Yes

IRC 6653(a) *

Negligence

Yes

Yes*

IRC 6653(b) *

Fraud

No

No

IRC 6654

Estimated Tax Penalty on Individuals

No

Yes

IRC 6655

Estimated Tax Penalty on Corporations

No

No

IRC 6656(a)

Failure to Deposit

Yes

Yes

IRC 6657

Bad Check

Yes

Yes

IRC 6659 *

Valuation Overstatement

Yes

Yes

IRC 6659A *

Overstatement of Pension Liabilities

Yes

Yes

IRC 6661 *

Substantial Understatement

Yes

Yes

IRC 6662

Accuracy-Related Penalty on Underpayments

Yes

Yes

IRC 6662A

Accuracy-Related Penalty on Understatements with Respect to Reportable Transactions

Yes

Yes

IRC 6663

Fraud

No

No

IRC 6676

Erroneous Claim for Refund or Credit

No

Yes

IRC 6692

Failure to File Actuarial Report

Yes

Yes

IRC 6698

Failure to File Partnership Return

Yes

Yes

IRC 6699

Failure to File S corporation Return

Yes

Yes

IRC 6721

Failure to File Correct Information Reporting Returns

Yes

Yes

IRC 6722

Failure to Furnish Correct Payee Statements

Yes

Yes

IRC 6723

Failure to Comply with other Information Reporting Requirements

Yes

Yes

* Repealed for tax returns filed after December 31, 1989
** Repealed for tax returns filed after December 31, 1986

WHEN ARE THEY REMOVED

IRS will typically remove the penalties if:

1. Interest was assessed as a result of IRS errors or delays.
2. A penalty or addition to tax was the result of erroneous written advice from the IRS.
3. Reasonable cause or other reason allowed under the law (other than erroneous written advice) can be shown for not assessing a penalty or addition to tax.

4. Amended/Corrected return. Original prepared by IRS (SFR / IRC § 6020B).

5. Undue economic hardship/inability to pay (FTP) See IRM 20.1.1.3.3.3.

WHAT SHOULD YOU DO IF IRS HAS ASSESSED LARGE PENALTIES AND FINES TO YOUR ACCOUNT

Consult with a tax professional who is knowledgeable in this area and can tell you why the penalties were assessed and how to have them removed or abated.

Maxwell Law Firm, represents clients all over the United States on IRS and North Carolina Tax related issues: Wage Garnishments, Tax Liens, Tax Collection Defense, Offers in Compromise, filing for bankruptcy, Installment Agreements, and Income Tax Services. We are North Carolina Licensed Law Firm. You can schedule your appointment by calling 704-461-1883 or save 25% off the fees by booking your appointment online. TELEPHONE CONSULTATIONS ARE AVAILABLE IF YOU ARE NOT ABLE TO COME TO EITHER OF OUR OFFICES.

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