Fortunately, there are several relief provisions that can help eliminate or otherwise reduce penalties that have been assessed.
Unfortunately, these provisions are not automatic and the relevant standards are often difficult to meet.That being said, you can obtain relief where you can demonstrate that it would be unfair to assert additional amounts because certain underlying circumstances had or currently exist.
The criteria for penalties to be abated is the “reasonable cause” standard. This standard states that despite the fact the taxpayer exercised business care and prudence, that something unforeseen occurred, and that in turn, caused the conditions in which the penalties were assessed.
The abatement of penalties is considered on a case-by-case basis. Unfortunately, with few exceptions, there are generally no predefined standards that can be applied. However, there does exist listings of prior penalty abatement requests that will generally be rejected. For this and similar reasons, it is strongly recommended that you employ the services of a knowledgeable tax consultant in the consideration of your individual circumstances.
The passage of time since the underlying event which caused the delay and the payment of taxes is paramount. Generally, the smaller the window of time between these events, the greater are you chances of success.
After you have determined that your application for abatement given your individual circumstances appears reasonable and your probabilities for success are good, it is a matter of drafting an appropriate letter or completing an application for consideration and mailing it. There is no requirement that you pay the penalties prior to your abatement request.
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