Penalty Relief: What you should know

After receiving a notice from the IRS stating that they assessed a penalty, check that information is correct, and then see if any of it is resolvable.

There are 3 types of penalty relief including reasonable cause, administrative waiver and first time penalty abatement, and statutory exemption.

Reasonable cause will be considered when a taxpayer can show the IRS that they tried to meet their financial obligations but were unable to do so due to extenuating circumstances such as a house fire or death in the immediate family.

First time abatement can be used when there have been no penalties assessed the three previous years, they filled all returns and have paid or are able to pay any tax due. Taxpayers can ask the IRS to consider the reasonable cause first in order to ‘save’ their abatement given it can only be used every 3 years.

Statutory exemption is for when taxpayers receive incorrect written advise from the IRS or legislation is the cause of an exemption.

If you have taxation questions, contact our law office at 816-524-4949 or visit our website at

This entry was posted in General. Bookmark the permalink.

Leave a Reply