November 21, 2008, Newsletter Issue #90: Penalty Abatement Defined
Tip of the Week
When a taxpayer is involved in repaying their delinquent tax bill with the IRS, an option available is known as an abatement.
An abatement, an IRS tax resolution method, allows taxpayers to repay their applicable tax bill, but the accompanying penalty or interest (if any) is removed from the tax bill. Therefore, taxpayers do not have to repay any penalties or interest on their tax bill. The penalty and interest are abated.
Do not consider an abatement if you cannot pay at least 75% of your total tax liability (less any penalties and interest).
In order to qualify for receiving a penalty abatement, however, you must show the IRS good reason (reasonable cause) for not being able to pay the entire amount due. As mentioned in other tips, reasonable causes consist of death, loss of income, illness, or imprisonment.
Request a penalty abatement using IRS Form 843 (Claim for Refund and Request for Abatement).
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