Are you eligible for Penalty Relief?

Each year the IRS assesses millions of penalties against taxpayers. Most taxpayers are unaware that the IRS also abates many of those same penalties.

Below is helpful information taken directly from the IRS website in regards to Penalty Relief.

You may qualify for relief from penalties if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control.


Penalties eligible for penalty relief include:

• Failing to file a tax return
• Failing to pay on time
• Failing to deposit certain taxes as required
• Other penalties as applicable.

 

The following types of penalty relief are offered by the IRS:

Reasonable Cause

The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include:

• Fire, casualty, natural disaster or other disturbances
• Inability to obtain records
• Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family
• Other reason which establishes that you used all ordinary business care and prudence to meet your Federal tax obligations but were nevertheless unable to do so.

Most reasonable cause explanations require that you provide documentation to support your claim, such as:

• Hospital or court records or a letter from a physician to establish illness or incapacitation, with specific start and end dates
• Documentation of natural disasters or other events that prevented compliance

 

Administrative Waiver and First Time Penalty Abatement

You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:

• You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.
• You filed all currently required returns or filed an extension of time to file.
• You have paid, or arranged to pay, any tax due.

The failure-to-pay penalty will continue to accrue, until the tax is paid in full. It may be to your advantage to wait until you fully pay the tax due prior to requesting penalty relief under the Service's first time penalty abatement policy.

Other administrative relief: If you received incorrect oral advice from the IRS, you may qualify for administrative relief.

 

Statutory Exception

If you received incorrect written advice from the IRS, you may qualify for a statutory exception. If you feel you were assessed a penalty as the result of erroneous written advice you received from IRS, the following items may be needed when requesting penalty relief:

• Your written request for advice.
• The erroneous written advice you relied on that was furnished to you by the IRS.
• The report, if any, of tax adjustments identifying the penalty or addition to tax, and the item(s) relating to the erroneous advice.
  

Generally, Form 843, Claim for Refund and Request for Abatement should be filed to request penalty relief based on incorrect written advice from IRS. 

For more information regarding Penalty Relief - please contact Ken Anaya at: (844) KAA-4TAX or (844) 522-4829

Why is the IRS Calling me?

If you have ever find yourself asking why the IRS is calling you, then this article is a must read. The first thing you have to know is that the IRS initiates most contact through regular mail delivered by the US Postal Service, so do me a favor and hang up the phone right now! Anytime anyone calls you with a harassing undertone or demands payment over the phone by any means should be a huge RED Flag!

There are special circumstances in which the IRS may call you or come to your home or business, if you have an outstanding tax bill or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations. BUT even then, taxpayers will generally receive several letters from the IRS. If an IRS representative visits you, he or she will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. You have the right to ask to see both.

The IRS will not:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  
  

This is a tricky one because believe it or not, I have already heard of some people getting scammed into buying iTunes gift cards - to the tune of $8,000. As crazy as this sounds, these scam artist have been quite successful at using this tactic. Now, it is easy to believe that that is not something that could ever happen to you; however, knowledge is power. If you had no idea that the person on the other line was a scam artist and they were threatening to ruin your life (literally) and take you for everything you had or have an officer come to your home and arrest you - there may be situations you could be fooled. There are scams going on all over the place asking 'smart' people to purchase gift cards for things such as taxes, hospital bills, bail money, debt collection, and utility bills. These scammers spend their entire day contemplating new ways to trick people into giving them their money.

Things to keep in mind

1. Scammers are mostly foreign.
2. Scammers may state the target's name, date of birth, and even Social Security number.
3. Early into the call, the scammer will try to elicit fear.
4. Scammers will tell a target that the best way to pay the tax debt is with an iTunes gift card.
5. The target is instructed to travel to a local retailer such as a drugstore and purchase iTunes gift cards to cover the total amount of tax owed, generally more than one card, since each has a limited maximum value.

•  Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.

The IRS will generally work with you to set up an installment agreement and you can even make revisions on current payment plans.

• Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other enforcement action. Recognizing these telltale signs of a phishing or tax scam could save you from becoming a victim. See also: How to know it’s really the IRS calling or knocking on your door

Contact K.A.A. Data and Accounting for more information or if you have general questions.