![]() ![]() Call the toll-free number at the top right corner of your notice to request penalty relief for reasonable cause and have supporting documentation. We may reduce or remove some penalties over the phone. You may reduce future penalties when you set up a payment plan. If you can't pay the full amount of your taxes or penalty on time, pay what you can now and apply for a payment plan. Economic hardships that prevented electronic filingįor more information see Treasury Regulation 301.6724-1.First time filer of the particular form or statement.Along with acting in a responsible manner, you must also prove there were significant mitigating factors with respect to the failure or the failure happened due to events beyond your control such as:.Corrected the failure as quickly as possible.Tried to prevent a foreseeable failure to file on time.Requested extensions of time to file when possible.You acted in a responsible manner both before and after the failure by having:.If you can show reasonable cause for failing to file accurate, timely information returns or payee statements, we may consider penalty relief if you prove: Whether your advisor was competent and experienced with the tax situationįor more information see Treasury Regulation 1.6664-4.Whether you provided all needed information.If you relied on a tax advisor, we may consider: Steps you took to understand your tax obligation or seek help from a tax advisor.Your education, experience, or knowledge of tax law.Efforts you made to report the correct tax.To determine whether you qualify, we consider factors including: If you received an accuracy-related penalty, you may qualify for penalty relief if you acted with reasonable cause and good faith. However, you may qualify for relief based on other facts and circumstances that show you used reasonable care and tried to comply with tax law. By itself, lack of funds is not reasonable cause for failing to pay or deposit taxes due. In certain cases, reasonable cause may apply to a mistake if additional facts and circumstances show that you tried to comply with tax law. You're responsible for making sure your tax returns, payments and deposits are correct and on time. This includes filing requirements, deadlines and amounts you owe. You're responsible for knowing or getting advice on how to file returns and pay or deposit taxes on time. You should know what your tax preparer files and get proof that your return or payment is sent on time. You're generally responsible for complying with tax law even if someone else handles your taxes. The following factors don't generally qualify as valid reasons for failure to file or pay a tax on time: System issues that delayed a timely electronic filing or paymentįor more information see Policy Statement 3-2.Death, serious illness or unavoidable absence of the taxpayer or immediate family.Fires, natural disasters or civil disturbances.You may qualify for penalty relief if you demonstrate that you exercised ordinary care and prudence and were nevertheless unable to file your return or pay your taxes on time.Įxamples of valid reasons for failing to file or pay on time may include: Reasonable cause doesn't apply to certain penalties such as the estimated tax penalty.įor businesses, the reasons apply to the person with authority to submit the return, deposit, or tax. Reasons that qualify for relief due to reasonable cause depend on the type of penalty you owe and the laws in the Internal Revenue Code (IRC) for each penalty. Reasonable cause is determined on a case by case basis considering all the facts and circumstances of your situation. How to Appeal a Penalty Relief Decision.You may qualify to have certain penalties removed or reduced if you acted with reasonable cause and in good faith.
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