April 20, 2007, Newsletter Issue #8: IRS Penalty - Bad Check

Tip of the Week

DebtHelp.com Tip: The IRS may penalize you if you pay your income taxes with a bad check. The penalty is 2% of the check amount. If the check is less than $750, however, the penalty is the less of $15 or the check amount.

If you can show the IRS that you submitted your check in good faith and with reasonable cause (knowing and thinking the funds were there), you may not be assessed this penalty.

IRS penalties can usually be avoided, in two simple ways. First, you need to have a reasonable cause. You simply need to show the IRS your reasoning behind any treatment of a questionable taxable item found on your income tax return. You need to show the IRS that you had a reasonable cause for doing what you did. You felt it was the best way to treat an item. Use IRS Form 8275 (Disclosure Statement) to state the relevant facts about why you are treating a certain tax item the way you are. Secondly, your reasoning (explanation) must be done in good faith. It must also be made with a good intention. This means that you did not have any intention of misreporting your income taxes to the IRS.

About LifeTips

Now one of the top on-line publishers in the world, LifeTips offers tips to millions of monthly visitors. Our mission mission is to make your life smarter, better, faster and wiser. Expert writers earn dough for what they know. And exclusive sponsors in each niche topic help us make-it-all happen.

Exclusive Sponsor

Are you having problems with the IRS? Stop the IRS from seizing your assets and get back on track today. Let DebtHelp.com find the right tax debt solution for you at http://www.debthelp.com/tax-help/

Not finding the advice and tips you need on this Tax Relief Tip Site? Request a Tip Now!


Guru Spotlight
Sheri Ann Richerson