What is a Tax Penalty Abatement?
Taxpayers with unfiled tax returns or unpaid taxes are often hit with the following IRS penalties:
- The failure-to-file penalty, which accrues at 5% of your unpaid taxes per month
- The failure-to-pay penalty, which accrues at 0.5% of your unpaid taxes per month
In addition, you’ll be charged interest each month if you have an unpaid balance. IRS rates are adjusted each quarter, but have been between 3% and 5% in recent years.
When you owe tens of thousands or more in back taxes, these penalties and interest can add a significant amount to your tax burden and make it more difficult to negotiate a tax resolution. Luckily, you may qualify for a penalty abatement – or simply put, penalty relief. Certain conditions, however, must be met to qualify. And there are a few different types of penalty abatement.
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