It is realistic to suppose that the majority of taxpayers detest filing taxes and detest paying IRS fines, particularly when the fines appear unfair. The IRS is clear and intentional about the purpose of penalties, which is to prevent taxpayer noncompliance rather than to generate income, although fines can also appear capricious to taxpayers.
Due to this, the IRS introduced the first-time abatement administrative penalty waiver 12 years ago, which enables generally compliant individual and corporate taxpayers to request the abatement or reduction of a few of the penalties that the IRS has for the first time levied against them. The IRS offers first-time penalty amnesty to reward normally conscientious individuals, which can result in savings of hundreds, if not thousands, of dollars.
The IRS introduced FTA in 2001 to aid in administering the reduction of penalties fairly, to recognize prior compliance, and to encourage subsequent compliance. A first-time non-compliance taxpayer may request a waiver of some administrative penalties for a particular tax period – one tax year for both individual and corporate income taxes and one and a half for payroll taxes by submitting a penalty abatement form IRS.
Techniques for Applying for First-Time Abatement Penalty Relief:
Depending on their circumstance, taxpayers have three options for requesting relief from unable-to-file, unable-to-pay, and unable-to-deposit penalties:
- To prevent the IRS from automatically assessing the charge, the taxpayer may submit a penalty non-assertion form along with a paper return.
- The taxpayer can ask for a penalty reduction post the IRS has imposed a fine, usually by sending the IRS a letter or giving them a call. Using IRS e-services, tax experts can also submit an abatement request.
- By using a Claim for a Refund and Request for Abatement, the taxpayer may ask for a return after paying the penalty. The claim must be submitted by the taxpayer no later than three years from the filing deadline, the due date for the return, or two years after the date the fine was given.
A taxpayer to who is granted an FTA by IRS will obtain Letter 168C for corporate unable-to-deposit penalty abatement and Letter 3503C or 3502C for individual unable-to-file and unable-to-pay the penalty abatement. Four weeks post the IRS approves the FTA; the letter typically arrives.