State and federal tax authorities will place stiff fines on unpaid taxes and delinquent taxes making the original sum owed, now including penalties and interest, much more challenging to resolve. Escobar & Associates, your tax expert, and professional tax preparers Austin, Texas, can help determine if you would qualify for a Penalty Abatement to take some of the weight off your debt.
Eligibility For Penalty Abatements
Determining eligibility for penalty abatements can be tricky. In order to qualify for a penalty abatement, the troubled taxpayer must first prove there were valid circumstances that prevented compliance with tax regulations. For example, the Internal Revenue Service has “Reasonable Cause” regulations to determine eligibility for penalty abatements. In order to be considered for a penalty abatement under reasonable cause guidelines, it first must be determined if the taxpayer has consistently shown “ordinary business care and prudence” in the past, and that this issue was an isolated incident.
Reasonable causes are many times defined by emergencies or crises, which rendered the taxpayer unable to fulfill their duty. Serious illness or death, in the individual’s immediate family, or, for a business, the death of the employee tasked with managing taxes may be considered. If there was a problem obtaining records or there was an error on the tax return and the taxpayer was in the process of attempting to correct the error, a penalty abatement may be granted. Additionally, events such as natural disasters such as hurricanes, fires, floods and other sincere emergencies can also weigh in as a reasonable factor. The timing of the emergency, crisis or life event is also taken into account. For example, a death in the family you claim kept you from your taxpayer duty that occurred well outside the immediate time frame that taxes were due would likely not be considered “reasonable.” The language that the IRS uses to illustrate what may be considered reasonable is complex and can make a taxpayer feel like the option is unavailable to them, even though they may have a perfectly legitimate excuse for requesting, and being granted, a penalty abatement. If you have a history of having a good standing with the tax authority, it’s important to have proper representation to help you substantiate your claim.
Carrying the burden of tax debt is hard enough without having additional penalties and interest added to the sum. Contact the Austin professional tax preparers at Escobar & Associates for a free consultation that should help determine if applying for a penalty abatement is right for your case and specific needs- and if it is not, we will guide you to what is.