Penalty Abatement; A case by case basis

Penalty Abatement is one of the decisions that the bureau of United States treasury department, Internal Revenue Service takes separately in accordance with the facts of the particular situation. So why does the IRS take penalty reduction requests by the taxpayers on case by case basis? In order to respond to this question, the taxpayer needs to understand that the most commonplace reason of articulating the request for penalty reduction in taxes is the Reasonable Cause.

The connection between Penalty Abatement and Reasonable Cause

In order to become eligible for reasonable cause, you need to give assurance on two significant points:

• You need to give the IRS a logical and an appropriate reason for not keeping track of the deadlines regarding tax filing
• Furthermore you also have to give evidence of the fact that all the time before, in terms of paying taxes, you were exhibiting ordinary care and far sightedness.

What exactly is the Reasonable Cause?

Reasonable Cause refers to any legitimate or authentic motive that compelled the taxpayers not to file for the taxes in their required timeline. And this excuse and reason should have sufficient weight in it so that you would able to prove the Internal Revenue Service that the late paying or filing was indeed justified.

Let us now see what might be some of the reasonable cause that can be seen by Internal Revenue Service as legitimate:

• You have seen the death of a family member or someone who was extremely close to you. This traumatic and heart wrenching period made the tax filing to go at the back of your mind.
• You may not be present at the time of tax filing; you might been through unavoidable circumstances and been in rehabilitation center or in jail
• Stuck in to another country as hostage
• Due to natural calamities or unseen situations such as floods, fires, explosions or other casualties all your book-keeping of tax records and documents may have suffered irrevocable damage.
•  There might be unrest and instability in the country in the form of riots, strike of transportation and closure of prime locations of the country. This unrest may lead you not to file for the taxes or make deposit or payment on their due date
• It is possible that you might have find a tax preparer or a tax professional whom you deemed has trustworthy and competent but he was totally opposite to your expectations. The financial advice regarding paying and observation of taxes was counterproductive and this may have led you to pay taxes past the due date.
• Due to some reason that were beyond your control, you were unable to define the required and correct amount of tax that has to be paid.

Are there other reasons then those listed above that would make you qualify for Penalty Abatement?

It so happens that, sometimes, that your situation or the reason for not filing and paying for taxes on time are not or they are not even close to the reasons listed above. In this respect, the taxpayer normally ask whether he is exempted from paying too much penalty or whether he has to pay the penalty according to the regulations of the Internal Revenue Service.

Most of the time, if your reasons for late filing do not correspond with the reasons listed above, the Internal Revenue Service look at the matter with close scrutiny and deep speculation. And by looking at the matter with deep insight, the representatives if the Internal Revenue Service may ask you some questions. How convincing your answer is would determine whether you qualify for Penalty Abatement or not.

Let us see what might be some of the questions that IRS agents might ask with the taxpayer:

• What circumstances lead you to cross the deadline for late filing?
• Do you exhibit a history of crossing deadlines? If that is the case then your chances of receiving Penalty Abatement are very low
• Were you facing real financial problem at that time or were you other bills fell prey to late payment? The reason why the agents ask this question is that they want to see whether the taxes were paid late or other financial bills too suffered delay.

Therefore, in order to attain Penalty Abatement you need to present the IRS with a reasonable cause. If you fail to present authentic excuse then you have to pay penalty for crossing deadlines of payment of taxes.