New Bern, Craven County and Morehead City, Carteret County Tax Attorney
IRS First Time Abate (FTA) Penalty Waiver
Did you know that in tax year 2012, the IRS assessed 37.9 million penalties against taxpayers totaling $26.8 billion? Did you know that individual, business, and payroll penalties for failure to file, failure to pay, and failure to deposit accounted for 74% of all penalties assessed in 2012? Did you also know that these types of penalties are all eligible for waiver under the IRS First Time Abate (FTA) Waiver policy?
If you are a taxpayer that owes money to the IRS, you are probably asking yourself, how do I qualify for this waiver? To qualify, you must demonstrate:
- filing compliance
- payment compliance
- a three-year clean penalty history
To meet the filing compliance requirement, you must have filed, or filed a valid extension for, all currently required returns. To meet the payment compliance requirement, you must also have paid, or arranged to pay through an installment agreement, any tax due. To satisfy the clean penalty history requirement, you cannot have had penalties of a “significant” amount assessed in the prior three years on the same tax return for which the client is requesting abatement.
Next, you are probably wondering how you can request the First Time Abate (FTA) penalty waiver from the IRS. A waiver request can be made through a telephone call, letter, or a request for refund on Form 843 if the penalty has been already been paid and is within the statute of limitations.
While the test for FTA waiver may seem fairly straight-forward, unfortunately the IRS gets it wrong more times than it gets it right. In fact, according to a 2011 IRS Advisory Council (IRSAC) report, the Reasonable Cause Assistant computer program makes incorrect determinations in 55% of all penalty abatement requests. Therefore, it is vitally important to have an advocate on your side who knows the tax law and more importantly is not afraid to show the IRS that they are not abiding by the law to get you the outcome you deserve.
If you have any questions regarding First Time Penalty Abatement or any other tax issue, please contact Andrew G. Foster at Harvell and Collins, P.A.