Penalties can make an already difficult balance larger. Here's why they're applied, and what relief programs may - or may not - apply to your situation.
Penalties exist to encourage on-time filing and payment, and they're applied automatically when a deadline is missed - the IRS doesn't generally evaluate intent before assessing one. That's exactly why relief programs exist afterward: to give taxpayers with a reasonable explanation, or a clean track record, a path to have the penalty reconsidered.
Applied when a return isn't filed by its due date, generally the larger of the common penalties.
Applied when a filed return's balance isn't paid by the due date, even if the return itself was on time.
Applied when quarterly estimated payments were too low relative to what was actually owed.
Applied to underpayments resulting from negligence or a substantial understatement of tax.
Applied to businesses for late or incorrect information returns, such as 1099s or W-2s.
A one-time waiver available to taxpayers with a clean compliance history for the prior three years, regardless of the reason for the penalty.
Available when a documented circumstance - serious illness, a natural disaster, or another significant event - prevented timely filing or payment.
Penalty relief is not guaranteed. Eligibility depends on the taxpayer's specific facts and compliance history, and is evaluated by the IRS case by case.
Interest generally continues to accrue on an unpaid balance regardless of penalty relief, and interest tied specifically to an abated penalty is typically reduced along with it - but interest on the underlying tax itself is a separate matter from the penalty question entirely.
We review your compliance history and the circumstances behind the penalty to determine whether First-Time Abatement, reasonable-cause relief, or another path may apply - and give you an honest read on the likelihood before requesting anything on your behalf.
Most commonly for filing late, paying late, or underpaying estimated taxes during the year - the notice you received will specify which penalty was applied and why.
We'll review your specific situation honestly - including if the answer is that relief isn't likely.