IRS Penalties Can Be 25-50%
of Your Tax Bill. Let's Eliminate Them.

You owe taxes — that's one thing. But penalties? Those can often be removed or reduced if you know how to ask. Here's how we fight for penalty abatement.

Eliminate My Penalties

What Are IRS Penalties?

IRS penalties are punishment fees for failing to file returns on time, failing to pay taxes owed, or understating your tax liability. They're separate from the actual tax you owe — and they add up fast.

The 4 Most Common IRS Penalties:

1. Failure to File Penalty

5% per month (or part of a month) that your return is late, up to maximum 25% of unpaid taxes. If you're 60+ days late, the minimum penalty is $435 or 100% of tax owed (whichever is less).

2. Failure to Pay Penalty

0.5% per month of unpaid taxes, up to maximum 25%. Reduced to 0.25% per month if you're on an installment agreement.

3. Accuracy-Related Penalty

20% of the understatement if you: (1) substantially understate income, (2) are negligent in your record-keeping, or (3) disregard IRS rules. This is common after audits.

4. Estimated Tax Penalty

Charged if you're self-employed or have income not subject to withholding and you don't pay enough estimated tax quarterly. Calculated based on the underpayment amount and number of days late.

⚠️ Penalties Compound Fast

A $20,000 tax bill can balloon to $30,000+ after just 2 years when you add failure-to-file penalties (25%), failure-to-pay penalties (25%), and interest (~8% annually). Penalties alone can represent 40-50% of what you owe.

How to Get IRS Penalty Abatement

The IRS will remove penalties — but only if you meet specific criteria. Here are the 3 main paths to penalty relief:

1. First-Time Penalty Abatement (FTA)

The easiest path. If you have a clean compliance history, the IRS will abate penalties for the first time you fail to file, fail to pay, or fail to deposit.

You Qualify If:

  • You haven't been penalized for the prior 3 tax years
  • You filed (or will file) all required returns
  • You paid (or arranged to pay) any taxes owed

What's abated: Failure-to-file penalty, failure-to-pay penalty, and failure-to-deposit penalty (for businesses). Not abated: Accuracy-related penalties, fraud penalties, or interest.

Success rate: Very high if you meet the criteria. This is administrative relief — the IRS grants it routinely.

2. Reasonable Cause Abatement

For legitimate hardships. The IRS will abate penalties if you can prove you had a good reason for not complying — and that you acted responsibly under the circumstances.

Accepted Reasons:

  • Serious illness or death: You or an immediate family member
  • Natural disaster: Fire, flood, hurricane that destroyed records or prevented filing
  • Inability to obtain records: Through no fault of your own
  • Reliance on bad advice: From a tax professional (with documentation)
  • IRS error: Incorrect written advice, lost returns, processing delays
  • Financial hardship: Severe enough to prevent payment despite best efforts

What's required: Detailed written explanation + supporting documentation (medical records, death certificates, insurance claims, letters from tax professional, etc.)

Success rate: Moderate. Depends on how well you document and present your case. This is where professional representation makes a huge difference.

3. Statutory Exception

For specific legal situations. Congress has carved out certain circumstances where penalties don't apply.

Examples:

  • Incorrect IRS written advice: You relied on written guidance from the IRS that was wrong
  • Combat zone service: Military members serving in combat zones get automatic extensions and penalty relief
  • Presidentially declared disaster: Automatic penalty relief for affected taxpayers
  • Federally declared disaster area: Filing and payment deadlines extended, penalties abated

How We Fight for Penalty Abatement

1

Analyze Your Penalty Exposure

We pull your IRS transcripts to identify exactly which penalties were assessed, when, and why. Often the IRS stacks multiple penalties — we break them down and determine which are eligible for abatement.

2

Determine Best Abatement Strategy

We evaluate: (1) Do you qualify for First-Time Penalty Abatement? (2) Is there reasonable cause? (3) Are there statutory exceptions? We pursue all avenues simultaneously to maximize penalty relief.

3

Prepare Comprehensive Abatement Request

We submit Form 843 (Claim for Refund and Request for Abatement) or call the IRS Practitioner Priority Service line directly. We include: (1) detailed written explanation, (2) supporting documentation, (3) legal citations, and (4) precedent cases if applicable. Presentation matters — the IRS denies poorly documented requests.

4

Penalties Abated — Balance Reduced

If approved, the IRS removes the penalties from your account. Your balance is reduced immediately. You still owe the underlying tax and interest, but eliminating penalties can save thousands — often 25-50% of your total bill.

Real Result: $18,000 in Penalties Eliminated

The Problem:

  • Real estate investor failed to file 2020-2022 returns
  • Previous CPA retired, didn't transition files properly
  • Total debt: $140,000 (tax + penalties + interest)
  • Penalties alone: $18,000

Our Strategy:

  • Applied for First-Time Penalty Abatement (client had clean 3-year history prior)
  • Argued reasonable cause: CPA transition created records gap
  • Documented client's attempts to obtain files from retired CPA
  • Filed all back returns immediately to demonstrate good faith

The Result:

  • All penalties abated: $18,000
  • Tax liability reduced from $140K to $122K
  • Client set up payment plan for remaining balance

Timeline: 6 weeks from abatement request to approval

Penalty Abatement Questions Answered

Can the IRS waive interest?

Almost never. Interest is mandated by law and can only be waived in extremely rare circumstances (e.g., IRS errors or delays that directly caused the interest to accrue). Penalties, however, can be routinely abated — and eliminating penalties often reduces your bill by 25-50%, which significantly lowers future interest accumulation.

Can I get penalty abatement more than once?

First-Time Penalty Abatement: Only once every 3 years (you need 3 clean years between requests). Reasonable Cause: No limit — you can request penalty abatement every year if you have legitimate reasonable cause each time. Bottom line: Use FTA when eligible (it's easier), then fall back on reasonable cause for subsequent years if needed.

How long does penalty abatement take?

First-Time Penalty Abatement: Often immediate if requested by phone (we call the IRS Practitioner Priority Service line). By mail: 4-8 weeks. Reasonable Cause: 8-12 weeks (the IRS needs time to review documentation). Appeals (if initially denied): 3-6 months. The key is comprehensive documentation upfront to avoid denials and delays.

What if my penalty abatement request is denied?

You can appeal. You have 30 days from the denial notice to request an appeal to the IRS Office of Appeals. We prepare a detailed rebuttal addressing the IRS's objections and often get denials overturned on appeal. Many penalty abatements are won at the appeals stage after initial denial.

Should I request penalty abatement before or after resolving my tax debt?

Ideally before. Eliminating penalties reduces your total balance, which means: (1) lower payment plan amounts, (2) lower Offer in Compromise calculations, (3) less interest accumulation going forward. We typically pursue penalty abatement immediately while negotiating the underlying debt resolution. Both can happen simultaneously.

Stop Paying Penalties
You Don't Have To.

Let's fight to eliminate or reduce your IRS penalties. It could save you thousands.

Request Penalty Abatement

📞 Or call: 248-985-8100

Strategic Planning Advisors, LLC

FixIRSTax.com | Tax Resolution Division

Disclaimer:

FixIRSTax | A Division of Strategic Planning Advisors LLC provides IRS resolution services. Information provided on this site is for educational purposes only and does not constitute formal tax, legal, or investment advice. Please consult your advisor before making financial decisions.

Information provided on this site is for educational purposes only and does not constitute formal tax, legal, or investment advice. Please consult your advisor before making financial decisions.

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