When seeking relief from back taxes, it’s important to consider the penalties that the IRS charges on unpaid balances. The penalty starts at 0.5 percent and reaches a maximum of 25 percent. Tax debt amount increases every month because the IRS charges penalties on the total amount due; this, combined with monthly interest, rapidly increases the liability.

Reprieve from penalties will only be considered if the taxpayer has a reasonable cause for not filing on time. The reasonable cause must be something that was beyond the control of the taxpayer, such as a natural disaster, theft, divorce, illness, etc. If the IRS accepts the reason for the non-compliance, then they may reduce the penalty or possibly remove it altogether.

When resolving a tax debt, individuals should attempt penalty abatement if they couldn’t pay their taxes on time as a result of something that was beyond their control. Penalties increase a tax debt each month, so resolving the liability early on is in the taxpayer’s best interest. Penalty abatement may reduce back taxes even if the individual doesn’t qualify for a debt reduction plan.