Are you stuck with IRS debt and don’t know what to do? Take a look at your situation and determine if you qualify for a penalty reduction, this is the easiest way to eliminate or reduce your debt. If this is the first time you’ve had trouble with the IRS, you could easily get over your debt and even shave off a few thousand dollars in the process.
First, the IRS first-time reduction or waiver (FTA) is available to all taxpayers but is often never requested because it is not advertised. This allows non-compliant first-time taxpayers to request a reduced penalty for one tax period. You can request an FTA for failure to pay or failure to apply for a penalty. If you are a business owner, you can request an FTA from penalties for failing to deposit payroll taxes.
You may also qualify for deductions in other circumstances that the IRS considers reasonable grounds. Some of the conditions that are determined as a reasonable cause are as follows:
• False Written Advice from the IRS. If the IRS has sent you written advice regarding your taxes or how to file certain circumstances and this advice has caused you to owe debt, they must absolve you of all penalties and give you the opportunity to enter into an Installment Agreement for that principle. or pay off the debt in full.
• False Verbal Advice from the IRS. If you receive advice from an IRS agent during a conversation, the IRS must deduct some of the debt attributable to the incorrect verbal advice given. To qualify for this type of deduction, you must prove:
1. You exercise the usual care and caution in relying on the advice.
2. There is a clear relationship between the situation, the advice given, and the punishment judged.
3. You have a clear tax history prior to the current issue.
4. The IRS does not transmit correct information through other means such as written documents or electronic correspondence.
5. Is there any supporting documentation? The following are examples of supporting documents:
a) Notation for (you) taxpayer inquiries to the IRS.
b) Documentation of advice provided by the IRS.
c) Information about the office and how to get advice.
d) Date of giving advice.
e) The name of the IRS agent who provided the information.
• Wrong Advice from Tax Advisor. Your reliance on a tax advisor for advice generally falls under the reasonable cause exception for accuracy-related penalties under IRC 662. You may however be denied a deduction in certain circumstances. Penalty waivers on a tax advisory basis are very limited, usually only in situations deemed complex or technical, so it is always advisable if you have a specific technical question, to contact an IRS agent about it. Due to the fact that the IRS can only grant leniency based on the criteria of faulty advice from an advisor, it is also advisable to make deductions by meeting the standard of reasonable cause.
• Fire, Casualty, Natural Disaster, Official Disaster Area, or Other Disturbance. If you have been the victim of any type of disaster or have been targeted by an official disaster area, the IRS can grant an extension to the application or even reduce the sentence.
• Service Error Correction. An IRS error can be any mistake the IRS makes while calculating and assessing taxes, or crediting an account. If an analyst from the IRS identifies a computer programming application that causes a penalty to be assessed for error, they will contact the appropriate party. If you have been a victim of this type of error, you can apply for a reduced sentence in the same way as if you filed a Wrong Judgment or Wrong Written/Oral Advice.
Requesting information for a reduced sentence may seem like a daunting task but tax attorneys and professionals are available to assist you in this endeavor.
