COVID penalty relief You may qualify for penalty relief if you tried to comply with tax laws but were unable to do so due to circumstances beyond your control. If you received a notice or letter, verify that the information is correct. If the information is not correct, follow the instructions in your notice or letter. You can apply for a penalty for the first time even if you haven't paid the tax in full on your return.
However, the penalty for non-payment will continue to increase until you pay the tax in full. Taxpayers can apply for an exemption from penalties. For not filing or paying the penalty, taxpayers can request that the IRS “reduce” the penalties. The reduction simply consists of eliminating penalties after they are imposed on the taxpayer.
Failure to file (FTF) and non-payment (FTP) penalties generally require a reduction because the IRS evaluates these penalties electronically (through its computer systems) when a return is filed or a transaction is made with a balance due. If you qualify for any other IRS tax resolution program or agreement, a penalty waiver will not apply. If you think you've been caught by an IRS fine and can't pay due to circumstances beyond your control, you may qualify for a one-time waiver from the IRS. By virtue of the reduction in the penalty for the first time, you're basically just asking the IRS to simply forgive the penalty, without any reasonable cause.
Now that you've completed the reasons why the IRS would forgive the fines, it's time to put it all together and make the request. When making the request by phone, you can contact the IRS simply to tell them that you will need to make your request in writing by mailing the forgiveness application package. The second thing to do before asking the IRS to waive the fine is to correct the original error of owing a tax to the IRS. The program doesn't apply to “non-payment” penalties, which cost 0.5% per month and are imposed on Americans who didn't pay their taxes on time, and it doesn't cover penalties imposed by fraudulent tax returns, the IRS said.
The IRS says the penalty relief program will allow it to “focus its resources on processing overdue tax returns and taxpayer correspondence.” The third thing to do before asking the IRS to waive the penalty is to sign an installment agreement, such as the Fresh Start agreement, or pay the balance owed to the IRS in full. If you file a bunch of disorganized documents, the IRS official will seek answers and the IRS agent may be discouraged from approving your request. In plain English, this means that if you have been up to date with the IRS and have corrected any issues that have arisen before, the IRS will be willing to work with you to find a solution to an unlikely problem. Taxpayers can request a reduction in penalties for tax accuracy after evaluating them, but the reduction process may require the use of special IRS procedures or taking the IRS to court.
The first thing to do before asking the IRS to waive penalties is to get all your tax returns in order. It must be recognized that the IRS has acted and today announced a comprehensive administrative penalty relief program for late filing of applications. However, if the IRS rejects your request to waive the fine, review the letter carefully to determine the reason.