IRS Penalty Abatement From Licensed Tax Agents in Pasadena, CA
For many taxpayers, the original tax is not what makes a balance unmanageable. It is everything the IRS added afterward. Penalty abatement is designed to tackle the penalties that have accrued on a tax liability, and at Fresh Start Tax Relief Services in Pasadena, our licensed tax agents know how to request it. We are a women-owned business with decades of experience dealing with the IRS, and we know which grounds for relief fit which situations.
The Penalties We See Most Often
Most IRS balances carry one or more of these:
- Failure to file, generally 5% of the unpaid tax for each month a return is late, up to 25%
- Failure to pay, generally 0.5% per month, also up to 25%
- Failure to deposit, charged to businesses that do not deposit payroll taxes on time
- Estimated tax penalties for those who underpay throughout the year
Left alone, these penalties can grow to a sizable share of the total. Our
delinquent taxes page explains how quickly that happens.
Ways to Get Penalties Removed
The IRS recognizes several grounds for relief. Part of our job is identifying which one gives you the strongest case.
First-Time Abatement
This is an administrative waiver for taxpayers with a good compliance history. You generally qualify if you had no penalties in the three tax years before the year in question, other than an estimated tax penalty. You must also have filed all currently required returns, or have a valid extension, and have paid or arranged to pay the tax due. First-time abatement can remove failure-to-file, failure-to-pay, and failure-to-deposit penalties for a single tax period.
Reasonable Cause
If you have used first-time abatement before, or have penalties across several years, reasonable cause may still apply. The IRS looks at whether you exercised ordinary care but could not comply because of circumstances beyond your control. Examples include a fire, natural disaster, or other casualty; the death, serious illness, or unavoidable absence of you or an immediate family member; or being unable to obtain the records you needed. Strong documentation makes a big difference here.
IRS Error and Written Advice
Penalties can also be removed when they resulted from an IRS mistake or delay, or when you relied on incorrect written advice from the IRS. These cases are less common, but they are worth checking.
What Penalty Abatement Does Not Cover
It helps to set realistic expectations. A lack of funds alone is generally not considered reasonable cause. Interest on the underlying tax usually cannot be removed, although interest charged on any penalties that are abated is removed along with them. Estimated tax penalties generally do not qualify for first-time abatement. We will tell you up front what can and cannot be reduced.
Penalty Relief for Businesses
Business owners often face failure-to-deposit penalties on payroll taxes, which can grow quickly and sit alongside other payroll tax problems. Abatement can apply here too. Our
payroll tax and trust fund penalty help page covers the larger picture for employers.
How We Pursue Relief for You
We review your account transcripts, identify every penalty, and determine which grounds for relief apply. Then we prepare and submit the request, whether by phone, by letter, or on Form 843, with the documentation needed to support it. If the IRS denies the request, the decision can be appealed. Penalty abatement often works best as part of a larger plan, such as pairing it with a payment plan or bringing unfiled returns current.
Serving Pasadena and Taxpayers Nationwide
We help clients in Pasadena, Arcadia, San Marino, La Cañada Flintridge, and across Los Angeles County. Our work extends far beyond Southern California: "Not only do we service every single county in California, but we service taxpayers nationwide." Learn more about the Tax Superwomen on the Fresh Start Tax Relief home page.
Frequently Asked Questions
Who qualifies for first-time penalty abatement?
Generally, taxpayers with no penalties in the prior three tax years, other than an estimated tax penalty, who have filed all required returns and paid or arranged to pay the tax due.
Which penalties can first-time abatement remove?
It can remove failure-to-file, failure-to-pay, and failure-to-deposit penalties for a single tax period. It generally does not apply to estimated tax penalties.
What counts as reasonable cause?
Circumstances beyond your control, such as a fire or natural disaster, the death or serious illness of you or an immediate family member, or being unable to obtain necessary records.
Is not having enough money considered reasonable cause?
Generally, no. A lack of funds on its own is not usually accepted as reasonable cause for penalty relief.
Does penalty abatement remove interest too?
Interest charged on penalties that are abated is removed with them. Interest on the underlying tax generally remains.
What if my abatement request is denied?
A denial can be appealed. We review the reason for the denial and determine whether an appeal or a different ground for relief makes sense.