Austin Tax Blog


People usually incurred different kinds of penalties for failing to pay their tax liabilities. There is a program introduced by the Internal Revenue Service (IRS) known as the First Time Penalty Abatement (FTA) that helps those first time offenders to clear their penalties as long as they are able to prove that they have a good track record of compliance.

If the requirements provided in the FTA are duly complied with, then taxpayers may file penalty abatement by means of executing a penalty abatement letter. But of course, there are other grounds that the taxpayers may use in order to be clear of incurring penalties.

Grounds for Abating Penalties

Grounds for Abating Penalties


The taxpayers usually invoke exceptions provided that such exceptions are stipulated in the IRS. Two of the most common exceptions in the IRS that the taxpayer may use to relieve him of tax liabilities are combat zone relief or disaster relief.

Administrative Error

This form of abatement may be quite difficult to invoke as the burden of proof in proving that such tax penalties must not be imposed lies heavily on the taxpayers. The ground of penalty relief argument is rarely used because it promises little to no success.

The taxpayer must be able to present sufficient evidence that IRS provided them wrong advice and such is heavily relied upon by the taxpayer. The IRS provides penalty relief in times of when the IRS employees gave false advice, but of course, such instance is quite difficult to prove.

Reasonable Cause

It is commonly raised by the taxpayers that the reason why they incurred such penalties is because they relied solely on the false guidance of their tax professionals or software. In order to properly invoke this, it has to show that there is a reasonable cause.

In order to be able to determine whether or not there is a reasonable cause to late filing or payment of taxes, the test of negligence must first be answered and properly took note of. The test of negligence states that whether or not a taxpayer has exercise that due diligence of a good father in his ordinary course of business however, due to external factors, was not able to comply.

Therefore, taxpayer must be able to prove that there was no voluntary negligence on his part that has resulted to noncompliance.

And, lastly, of course, the FTA, which may be invoked to relieve the taxpayers of his tax liabilities. FTA has long been considered as one of the easiest abatement options. As long as the taxpayer was able to prove that he was compliant by presenting sufficient evidence, then he will be relieved of such liabilities.

Penalty Abatement Letter

Penalty Abatement Letter

In order to be able to file with the IRS the penalty abatement, the forms of penalty abatement letter must duly complied with. Irregularity in the forms of the letter can render the petition null and void. This should be written in the format that states the taxpayer’s reasons for the request of abating his penalties.