Taxpayers can check their eligibility for a penalty abatement if they haven’t filed, or paid their taxes on time or in full. The IRS charges penalties and interest on any tax amount paid after the tax filing deadline. To get penalties reduced or forgiven, taxpayers need to provide a ‘reasonable cause’ for the delay in filing or paying their taxes on time or in full.
Any cause that was beyond the control of taxpayers such as natural disasters, death of a close family member, critical illness, or divorce can achieve relief from penalties. If taxpayers could not file taxes because of unavoidable circumstances, they can apply for a penalty abatement.
Penalties can be reduced or forgiven only under certain circumstances, depending on the IRS’ approval of the ‘reasonable cause’ given. Major tragedies that affected taxpayers are usually considered a ‘reasonable cause’ by the IRS.
To minimize the interest on taxes owed, taxpayers can obtain a loan and pay as much amount of tax debt as possible. The interest rate on loans from a bank is usually less than the interest the IRS charges.
It is advisable for taxpayers to pay as much amount when filing taxes, even if they cannot pay the entire amount. Applying for extension of time is another option taxpayers can use when it becomes apparent they won’t be able to make the tax filing deadline.