Contest all IRS penalties

M-E Accounting & Tax Services Inc. |

In many cases your company (or you) should contest IRS penalties, even taxes owed, according to tax experts surveyed by The Wall Street Journal. The IRS says it assessed about 39.6 million penalties in 2016 and forgave about 5.2 million. The tax experts surveyed say there’s no downside to asking for a penalty to be abated, and there’s a good chance the IRS will agree. The most common penalties are for late filing, late payment, and estimated-tax issues. Penalties such as failure to file or not paying on time are the most likely to be abated. The IRS says about 20% of delinquency penalties and half the dollar amounts assessed are abated. The IRS will abate a penalty when there is reasonable cause, and it will consider any sound reason for an abatement. Specific reasons listed on its website are fire, natural disasters, casualties, inability to obtain needed records, death, serious illness, incapacitation, and an unavoidable absence of the taxpayer or a member of the taxpayer’s family. There is also a first-time penalty abatement if there were no penalties for the previous 3 years, you filed all currently required returns or extensions, and paid or arranged to pay all taxes due. But you must ask for the abatement; the IRS does not initiate or widely advertise it. [The Wall Street Journal]