IRS Tax penalties
The IRS issues about 40 million penalties each year. There are almost 150 types of IRS penalties, but the most common ones are caused by late filing and late payment.
The IRS offers four options for taxpayers to get their penalties removed -- if the circumstances fit.
You or your tax professional will need to investigate which options you may be able to use, and request penalty relief from the IRS.
How to address IRS penalties
1. Understand your options, based on your facts.
- Tax Penalties are based on the taxes you owe, so make sure you get the tax right first. Start by double checking your return. Consider amending your return if the taxes are incorrect.
- Understand the four penalty abatement options:
- IRS error
- Specific legal exceptions to penalties
- Reasonable cause
- Administrative waivers
- Get the facts on your penalties:
- Penalty type(s)
- Amounts owed
- Year(s) involved
- Based on your situation, identify which penalty relief options you can use. Keep in mind that more than one option may be applicable.
2. Request penalty abatement from the IRS.
- Put together your penalty abatement request for the specific option you’re pursuing.
- Send your request to the proper unit at the IRS.
- Use the right method to submit your request.
- If you’ve already paid the penalty, you may have to submit a claim-for-refund form.
- If you’re requesting an administrative waiver for penalty abatement, you may be able to handle the request with a phone call to the right IRS function.
- Respond quickly to any IRS requests for documents supporting your abatement request, and be prepared to argue the merits of your position.
- If the IRS denies your request, appeal the decision by the deadline, and argue your position with the IRS Appeals Office.
3. Prevent future penalties.
- Make sure you file accurately and pay your taxes on time in the future.
- If you have penalties related to late payments, adjust your withholding and/or make estimated tax payments.
Your H&R Block tax professional can help you figure out which penalty abatement option you can pursue – and help you request it from the IRS. Learn more about H&R Block’s Tax Audit & Tax Notice Services.
Bring these five items to your appointment
- A copy of your IRS notice(s)
- A copy of the tax return in question
- A chronology of the events surrounding the time of the issue
- A history of any past penalties
- Documents that support your reason for abatement
Ready to file?
You've got your forms. And we've got your back. There's only one thing left to do. Let's do this.
So how much will you get (or owe) this year? That’s the million-dollar question. We happen to have three very useful calculators to help you estimate your refund or balance due.