Penalty / Interest Abatement

This occurs when penalties and/or interests are eliminated, and the taxpayer is only responsible for the original balance of the tax debt. A taxpayer will face penalties for either not filing or paying taxes on time.

This will occur in cases where the IRS considers the taxpayer’s liability as a reasonable cause and not willful neglect.

Reasonable cause includes the following: death or illness of an immediate family member of the taxpayer, unavoidable absence, destruction by natural causes of a taxpayer’s residence, the taxpayer cannot reasonably obtain the records for liability determination, the non-filing was due to IRS error, failure by the US Post Office, failure by a competent tax advisor, civil disturbance and many more.

They fall into four categories: Reasonable Cause, Statutory Exceptions, Administrative Waivers and Correction in Service Error.

However, the burden of proof lies with the taxpayer to prove their reasonable cause.