Can I Get Rid of IRS Penalties?
If you owe the IRS for unpaid taxes, you already know that the penalties are quite severe and often exceed the actual tax due. But, the big question is, what can you do about them? Almost all penalties are assessed automatically by the IRS computer system. It is only on audit cases that certain penalties are determined by an individual. Some penalties are erroneously assessed, but the majority are correct. So, what can we do?
If the penalties assessed against you are correct, can you still get them abated? Yes, if you meet the IRS criteria for reasonable cause. What constitutes reasonable cause to me and you may not seem reasonable to the IRS. Some tax firms advertise that they will get all the penalties (and interest) abated. Don't believe it. Anyone that can tell you what will happen without knowing all the details of your case is probably wrong.
In bankruptcy, if the tax is dischargable at less than 100%, then so is the penalty. But, if you file a bankruptcy, wtih some exceptoins, no further interest on the balance due is added, and no additional penalties are added either.
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