The IRS charges interest and penalties on any outstanding taxes. The combined charges for interest and penalties may even be greater than the amount of the original taxes due. The law allows for the removal or reduction of penalties based on “reasonable cause.”
Some circumstances that the IRS recognizes as “reasonable cause” for penalty abatement consideration include: mental or physical illness, death or serious health condition suffered by a family member, extended military service, drug or related dependency problems, and reliance on inaccurate advice from a professional tax advisor.
There are numerous other “reasonable cause” circumstances which may result in removal or reduction of penalty charges. The outcome of a penalty abatement request largely depends on how the case is argued. Therefore, a detailed account of the facts and circumstances that gave rise to the outstanding tax liability is the key to a successful penalty abatement request.