All You Need to Know About IRS Penalties

Feelings of anxiety when talking about IRS penalties and back taxes are normal and valid. Fortunately, guidelines and procedures aimed at providing regular taxpayers some recourse when dealing with IRS issues are available. Taxpayers can ultimately be released from back taxes and other penalties through negotiations and installment plans.

To review, cases like not filing tax returns, incorrectly filing of taxes, misleading the IRS and not paying quarterly taxes endanger taxpayers for penalties. For information on the entire list of penalties, including the processes on penalty abatement and assessment, you may refer to the Penalty Handbook. This goes to show then that aside from the taxes collected, the government also earns through the interests enforced on some delinquent taxpayers.

With the intention of ensuring that the IRS does the penalties assessment accurately, the government made several options available for all taxpayers. Recent updates to the IRS policies now make the process of dismissing penalties a relatively simpler one. While it is still rather difficult in comparison to the nearly impossible battle it once was, times have changed considerably.

Taxpayers learn about interests, levels and abatement of penalties by reading the IRS Penalties Handbook. When taxpayers are well-informed about the nature of these penalties, they will discover ways of reducing their odds of being subjected to these as well.

The IRS Penalty Policy Statement implies that penalties are technically no longer automatic. You may qualify for an IRS abatement of penalties, or a cancellation of some or all of your penalties, if you can justify your actions and prove that they were done on good faith.

You may ask how much the IRS earns from the collection of penalties alone. Approximately, the figure goes over $15 billion. Not only is this a big source of income for the IRS, conversely, it is also the cause of a great deal of frustration on the part of taxpayers.

It is the accumulation of the original tax due and the applicable penalties that makes matters worse for a lot of people. Usually, the total amount due is doubled or even tripled in a very short span of time as interests are accrued on the new, larger sum. This results to difficulty in paying off the full amount.

When you get an IRS notice indicating a possible problem resulting from some tax dues, you can actually respond and request from them a cancellation of these penalties. This response is the first stage to the penalties abatement process, which, fortunately, can be availed of by all taxpayers. If proven that you did not willfully defraud the IRS, the “good faith exception clause” in the provisions of IRS penalties can actually be used. In summary, although IRS penalties signify danger to you and your assets, their effects can always be reduced, if not altogether eliminated, by using the options available to all taxpayers.