Ways to Reduce or Abate a Federal Tax Penalty – Los Angeles Income Tax Planning and Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on November 5, 2013

In addition to collecting federal taxes, the Internal Revenue Service (IRS) also is a valuable tax resource. The IRS Penalty Handbook is one of the great tools offered by the IRS.

Every year, millions of dollars in interest and penalties are assessed by the IRS. According to the Penalty Handbook, when managing penalties, the IRS must assess them consistently, accurately, and with impartiality. Also, any taxpayer who is assessed a penalty must be given a chance to discuss the assessment with the IRS.

Most of the penalties assessed by the IRS fell into five categories: the late filing penalty, the late payment penalty, the late deposit penalty, negligence, and substantial underpayment.

The Penalty Handbook notes, however, that the IRS’ may abate an assessed penalty. The IRS will abate an assessed penalty if there is reasonable cause, a statutory exception, or the IRS has made a correctable error. A penalty can also be abated by administrative waiver. Examples of reasonable cause include death, a natural disaster, undue hardship, or reliance on written or oral advice from the IRS or a tax advisor. Moreover, if a taxpayer has never been delinquent with his or her federal taxes or required to file a federal tax return, the IRS may abate the penalties under the First Time Abatement Rule. Because any abatement must be requested by and properly referenced by the taxpayer, consulting an experienced tax professional is highly recommended.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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