In many tax debt cases, the penalty portion of the tax debt is quite significant. If you are facing penalties for not filing or paying your taxes on time, you may be able to get those penalties removed through penalty abatement or penalty adjustment. Abatement refers to eliminating an assessed tax liability and an adjustment references reducing or altering an assessed liability.
There are several methods to consider with penalty abatement. One method is reasonable cause. If there is a ‘reasonable cause’ for abatement or adjustment, the IRS may be willing to review the penalties and make adjustments. Each taxpayer has unique circumstances, but some examples of reasonable cause may include:
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Mailing the tax return or payment on time but writing the wrong address on the envelope; using the wrong amount of postage
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A death or illness in the family
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An error caused by an IRS employee
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The destruction of records by a fire, flood or other catastrophe
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