Penalty Abatement

Penalty Abatement

Bank LeviesNot all taxpayers have the capacity to pay their taxes on time or the precise date. This results to the delayed paying of taxes or not paying the taxes at all. In order to prevent this situation, the IRS, made the Penalty of Abatement in order to encourage taxpayers the tax bill imposed on them. This adds to the comfort of each taxpayer not to pay any more taxes because they will have penalties if not doing so. The penalties will cause them financial problems most of the time. But don’t worry; at Green Tree Tax we have Enrolled Agent experts that will assist you with that.

The Three Major Penalties

Around 150 penalties can be found in the Internal Revenue Code. These penalties are addressed to each taxpayer depending on the penalty he or she had made. However, most taxpayers need to address only a few essential penalties that are part of the 74% of all penalties.

The following are the most common penalties that a taxpayer should keep in touch of:

  1. Failure-to-pay penalty

This involves 56% of all the abatement penalties under the IRS. This penalty is imposed when a taxpayer doesn’t pay his or her tax bill on the scheduled due date;


  1. Failure-to-file penalty

This penalty comprises a total number of 14% of all penalties presented to the taxpayers. Therefore, this is a type of tax imposed when a taxpayer does not file a return the scheduled time.


  1. Failure-to-deposit penalty

This amounts to 4% of all the created penalties under the Internal Revenue Code if a business doesn’t pay employment taxes on the scheduled date or pays them in a wrong manner.  This tax penalty is imposed.

Considerations for the Taxpayer in order to avoid having Abatement Penalty

  • This only applies to one tax year or period and if a request for penalty relief is considered for two or more years, penalty relief will only apply to the earliest tax year or period. This applies if the taxpayer meets the criteria set by the IRS.  The penalty relief for all the following tax years/periods is being based on relief provisions such as the reasonable cause criteria.


  • If the IRS has not filed the penalty, a client who is filing a return late and failure-to-file and failure-to-pay penalties will be considered not take the penalty. The taxpayer must attach a penalty non-assertion request to form that he or she has.


  • Hence, this will apply if the client has paid the penalty in advance. He or she might file a Form 843 that is called the Claim for Refund and Request for Abatement. In this process, the request for a refund will be granted by the IRS.


  • In addition, if the IRS doesn’t grant the process, then it is considered to take the process to the Appeals. Appeals will provide a different decision based on other considerations. An example is the hazards of litigation.


  • If the client advocate doesn’t ask for abatement, he or she can’t avail for the client. However, if he or she asks a request form based on the criteria he or she has, the relief penalty will be availed.

Therefore, you should better consider the abatement penalties and make a move to pay your taxes on time.