How to Get an IRS Late Filing Penalty Removed

There are several separate penalties that may be attached as part of your late filing penalty with the IRS. First, it is important to remember all tax reports and payments must be made by April 15 of the year following the reporting year. If you cannot meet this deadline, you may apply for an extension either to file or pay your taxes. In the absence of any extension, you will face three penalties: one for filing late, one for paying late and an interest fee assessed on an annual basis. To avoid these penalties, take the following steps.

#1 Always File On Time, Even if You Cannot Pay

Even if you cannot pay on time, you must file your taxes on time. The penalty for filing late is 5 percent of your assessed taxes for each month you are late, up to 25 percent total. In comparison, the penalty for paying late is only 0.5 percent each month. Therefore, simply turning in your forms will save you 4.5 percent in penalties each month.

#2 Provide Reasonable Cause

If you cannot file on time, you can appeal to the IRS not to penalize you by stating the causes that resulted in your late filing. The only consistently acceptable cause is misinformation provided to you from the IRS directly. For example, if you contact the IRS or one of its service centers in order to receive advice on filing deadlines and receive the wrong advice, this is a cause for the removal of a late filing penalty. In order to prove this instance occurred, you would be required to provide a copy of your response from the IRS along with your request to have the penalty lifted. Other possible examples would be an extended illness, incapacitation or absence due to a responsibility such as military service.

#3 File Form 843

Form 843 is the IRS's Claim for Refund and Request for Abatement form. You will fill this out and attach your letter citing reasonable cause. If you are using the defense of "erroneous advice" provided to you from the IRS, attach your initial request for advice and the response you received. The IRS will notify you if your request has been accepted or denied promptly through the mail. In a circumstance where you cite reasonable cause other than "erroneous advice," you will need to provide another form of proof. For example, if you were incapacitated due to injury for 60 days prior to April 15, you may be able to lift the penalty by providing proof of your incapacitation.

#4 File as Soon as Possible

Whether you have the penalty lifted or not, you should file your tax return as soon as possible. If you do not file, the penalties and interest on your account will continue to accumulate. Eventually, the IRS will create a substitute return on your behalf. This money will be collected from you through whatever means possible, including wage garnishment. Even if the IRS files on your behalf, it is smart to file your own return in order to properly record deductions, credits and exemptions due to you. Your account can be adjusted appropriately.

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