Taxpayers billed for penalty charges who feel they have вЂњreasonable causeвЂќ, should send their explanations with their bill to their IRS Service Center or call the IRS at the telephone number indicated on the bill for assistance. You divorced and, as a result,В your income was suddenly and substantially reduced.You were at the time severely depressed from, for example, the death of a loved one.You were suffering, at the time, from a physical or mental healthВ condition, includingВ addiction, or alcoholism.Some possible excuses that mightВ establish вЂњreasonable causeвЂќ are: The IRS generally will accept as вЂњreasonable causeвЂќ excuses those instances when the non-filing or non-payment was not in your power to prevent. To qualify for an abatement of penalties on grounds of вЂњreasonable causeвЂќ, you must have an acceptable excuse. Thus,В if facts merit, request a вЂњreasonable causeвЂќ waiver or abatement before seeking a FTA. If youвЂ™ve used вЂњreasonableВ causeвЂќ to abate a penalty, you can still receive FTAВ in a subsequent year within the three-yearВ look-back period. You qualify for abatement as often as вЂњreasonable causeвЂќ is present, although habitual non-filers will find it hard to locate a good excuse. For вЂњreasonable causeвЂќ you arenвЂ™t limited by the three-year rule. For FTA, you must have a clean record for three years. вЂњReasonable causeвЂќ abatements require proof but offerВ more advantageousВ relief than FTA. IRS will base decisions on removing any future failure to file, failure to pay or failure to deposit penalties on any information taxpayers provide that meets вЂњreasonable causeвЂќ criteria. Taxpayers who cannot establish вЂњreasonable causeвЂќ for the delinquency should request First Time Abatement.ДЇIRST SEEK вЂњREASONABLEВ CAUSEвЂќ PENALTY WAIVER OR ABATEMENTДЇor penalties not eligible for FTA, IRS will consider whether the taxpayer has вЂњreasonable causeвЂќ for the late filing, late payment or late deposit. Gift (and Generation Skipping Transfer)Tax Return, or on Form 1120, or Form 1120S if returns were filed and a penalty assessed within the past three years. The FTAВ relief isВ never availableВ for some penalties such as thoseВ on event based late filed returns or unpaid tax such as for Form 706, U.S. For payroll taxes, the FTA applies to only one tax period.If multiple periods are involved (e.g., payroll tax quarterly returns), FTAВ will apply to the earliest period that meets the FTA criterion. To obtain the one-time relief for your first transgression you must:.Thus, the penalties alone (putting interest aside) can grow to a very large and imposing amount. This penalty ranges from 2 percent to 15 percent of the amount not timely deposited depending on how many days late is the deposit and whether IRS has notified you of the delinquency. Failure to deposit taxes which you are required to deposit under IRC В§ 6656.This penalty is 1/2 percent per month or part of a month that the failure to pay continues and also maxes out at 25%. This penalty is 5 percent for each month or portion of a month the failure to file continues up to a maximum of 25% Failure to file a required return under IRC В§В§ 6651(a) (1) (individual returns), 6698 (partnership returns)В & 6699 (S Corp.The relief applies to the following penalties:.See IRM 20.1.1.3.6.1.ДЇirst Time Abate policy (FTA) is an IRS special relief policy that removes assessed penalties under the following general guidelines: The policy was modified to clarify that relief applies only where the taxpayer is current with all tax filings and tax payments. The IRSВ today clarified its policy with regard to abatement of certain penalties for first time offenders.

Irc 6651