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IRS Penalty Relief

Remove or reduce IRS penalties that can add thousands to your taxes. Many taxpayers qualify for penalty relief, especially first-time offenders with good compliance history.

Common IRS Penalties

Failure to File
5% per month
For not filing your tax return by the due date
Rate:5% per month
Maximum:25% of unpaid taxes
Failure to Pay
0.5% per month
For not paying taxes owed by the due date
Rate:0.5% per month
Maximum:25% of unpaid taxes
Accuracy-Related
20% of underpayment
For substantial understatement of tax
Rate:20% of underpayment
Maximum:20% of underpayment
Estimated Tax
Variable rate
For not paying enough estimated tax during the year
Rate:Variable rate
Maximum:No maximum

Penalties Add Up Quickly

IRS penalties compound monthly and can quickly exceed your original tax due. The sooner you address penalties, the more you can save.

Penalty Relief Options

First-Time Penalty Abatement
Administrative relief for taxpayers with good compliance history
High Success Rate

Requirements:

  • No penalties in prior 3 years
  • Filed all required returns
  • Paid or arranged to pay taxes owed

Applies to: Failure to file, failure to pay, and failure to deposit penalties

Reasonable Cause Relief
Relief based on circumstances beyond your control
Moderate Success Rate

Requirements:

  • Ordinary business care exercised
  • Circumstances beyond control
  • Good faith effort to comply

Applies to: Most penalty types with proper documentation

Statutory Exception
Relief based on specific legal provisions
Variable Success Rate

Requirements:

  • Meet specific statutory criteria
  • Proper documentation
  • Timely request

Applies to: Specific penalties with statutory relief provisions

How to Request Penalty Relief

1

Determine Eligibility

Review your compliance history and circumstances to determine which type of relief you qualify for.

  • Check penalty history
  • Review compliance record
  • Identify qualifying circumstances
2

Gather Documentation

Collect supporting documents that demonstrate your eligibility for penalty relief.

  • Tax returns and transcripts
  • Payment records
  • Documentation of circumstances
3

Submit Request

Submit your penalty abatement request by phone, letter, or through a tax professional.

  • Call IRS directly for FTA
  • Write formal request letter
  • Include supporting documentation
4

IRS Review

The IRS reviews your request and may ask for additional information or documentation.

  • Review typically takes 30-90 days
  • May request additional documentation
  • IRS may partially approve request
5

Receive Decision

The IRS will notify you of their decision and any penalty adjustments made to your account.

  • Receive written notification
  • Account adjusted if approved
  • Can appeal if denied
Tips for Success

Best Practices

  • ✓ Request relief as soon as possible
  • ✓ Be honest about your circumstances
  • ✓ Provide complete documentation
  • ✓ Follow up on your request
  • ✓ Consider professional help for complex cases

Common Mistakes

  • ✗ Waiting too long to request relief
  • ✗ Incomplete or missing documentation
  • ✗ Not following up on requests
  • ✗ Requesting wrong type of relief
  • ✗ Not addressing underlying compliance issues

Don't Pay Unnecessary Penalties

Many taxpayers qualify for penalty relief but never request it. Get help removing penalties from your tax debt.