The IRS will evaluate certain criteria when considering Penalty Abatement. The IRS may remove (abate) your penalty(s) for any of the following reasons:
- Reasonable Cause: This is relief that is generally granted when a taxpayer exercises ordinary business care and prudence in determining their tax obligation, but is unable to comply with those obligations due to circumstance beyond their control.
- Statutory Exceptions: The tax law provides for specific exceptions.
- Administrative Waiver: This may occur as result of a formal government directive providing penalty relief because of a natural disaster or catastrophic event.
There are 5 reasonable cause criteria that the IRS will consider:
- Death (spouse, siblings, parents, grandparents, children)
- Serious illness
- Unavoidable Absence
- Inability to obtain records
- Reliance on written advice from the IRS or advice from a tax professional
When you are trying to submit for Penalty Abatement you will have to prepare an Appeals Request with the IRS. Contacting a company that knows the IRM, and what your options are, is the best way to present your appeal to the IRS. This will also greatly increase your chances of success. I normally recommend that my clients use the Penalty Self-help tool on the IRS website to determine if applying for Penalty Abatement is a possibility.