You can avoid a penalty by filing accurate returns, paying your taxes before the due date, and providing any information on time. If you are unable to do so, you can request an extension to file the application or a payment plan. The extension period ends 6 months after the original due date or on the date the return is filed, whichever comes first. If you file your return more than 6 months after the due date, the automatic extension provision will not apply and the return will be subject to a late filing penalty on any tax balance due with the return.
If you file your return within 6 months of the original due date, but you do not pay the tax due until after you have filed the return, even if the tax is paid within 6 months of the original due date, the extension penalty will apply during the extension period and then the late payment penalty will apply for the rest of the period for which there is no Paid the tax. If you file your return within 6 months after the due date, but you don't pay the tax due until after that date, your return will be subject to a late payment penalty. Like the late filing penalty, the late filing penalty applies at a rate of 6% per month, with a maximum penalty of 30%. A late filing penalty will not be imposed in any month for which a late filing penalty has been imposed.
In addition, the late payment penalty generally does not apply when an additional tax balance is established as a result of auditing an income tax return that was filed in good faith. The return may be subject to both the late payment penalty and the extension penalty, as explained above. When a precautionary measure is granted, especially after the evaluation of the sanction, the appropriate parts of it shall be deleted. However, adjustments due to reasonable cause are governed by specific guidelines.
In essence, a taxpayer can have reasonable cause when evidence of their conduct justifies the non-imposition or reduction of the fine (“Reasonable Cause”). Cases are tried individually; judgments are based on the evidence, facts and circumstances presented. The Internal Revenue Manual describes how reasonable cause provisions and other relief provisions are applied in the context of effective tax administration. The provisions must be applied in a “consistent” manner and must comply with the considerations specified in the IRC, the Treasury Regulations (Tareas).
Rules. It's important to note that there isn't always reasonable cause available for all sanctions. For example, a reasonable cause provision can only apply to a specific section of the Internal Revenue Code. In addition, acceptable explanations are not limited to those described in section 20.1 of the Internal Revenue Manual.
In essence, the possibility of reducing the fine is usually considered when the findings reveal that the taxpayer acted with usual caution and prudence, even though he was unable to comply with the requirements within a prescribed time frame. . Reductions in tax penalties are somewhat difficult to accept, since the IRS doesn't like to simply settle them without good cause. However, there are a number of “reasonable cause” factors encoded in the Internal Revenue Manual that taxpayers can use as a basis for challenging their tax sanction.
According to the IRS definition, a reduction in the tax penalty is generally granted when the taxpayer acts with ordinary caution and prudence, but fails to comply with their obligations. Any reason or basis outside of these factors will be much more difficult for the IRS to justify reasonable cause. The IRS generally looks at four factors when deciding to reduce a tax penalty for a reasonable cause. Although this factor is more difficult to use as a reasonable cause argument, ignorance of the law is still a factor that the IRS may consider when determining the validity of a reduction in the tax penalty.
Forgetfulness, by nature, does not suggest to the IRS that you have exercised reasonable care and prudence in trying to comply with your tax obligations. The IRS even states in the IRM that relying on another person to fulfill their obligations or supervise on their own behalf is generally not enough to establish reasonable cause. Did any of the reasonable causes I set out make an impact on you? If so, we need to talk. Call me and we'll find out how we can convince the IRS to grant you a tax reduction.
It won't be an easy process, but it's definitely worth a try. You may be able to reduce hundreds or thousands of dollars from your tax bill. Throwing another person under the bus is a tactic that tax professionals often use to reduce penalties in other areas, such as in an audit. While the use of this argument to reduce tax sanctions depends on the facts, it can be one of the most successful arguments for reducing tax sanctions.
The IRS has a number of strict guidelines that taxpayers must comply with in order to consider reducing the penalty. In addition, the IRS takes a hard and fast approach to evaluating tax penalties and will often evaluate them without considering the underlying circumstances. Since the late filing penalty does not apply unless the return is filed more than 6 months after the original due date, a late filing evaluation will reflect the maximum penalty of 30% of the tax due. I won't dare to say that receiving bad advice is a success in mitigating sanctions, but bad advice, whether from the IRS or a tax professional, is one of the most compelling reasons to reduce tax penalties.
Understand the most common types of commercial IRS tax penalties for filing and paying late, and what are your possible options for requesting relief from the IRS fines. The FTA can be used to reduce fines for lack of presentation, non-payment, and no-deposit during a tax period if you have a clean compliance record for the past three years. My professional opinion is that no attempt should be made to reduce fines due to forgetfulness, and it is better not to cite this in your reasoning in favor of reducing the fine than to try to present this argument to the IRS. Trusting an expert or something the IRS tells you is indicative of the usual care and prudence the IRS seeks when granting a reduction in tax penalties.
If the taxpayer can demonstrate this, then he should be able to get the reduction in fines without a doubt. .