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Challenging IRS Tax Penalties with Reasonable Cause

  • Written by Steel Rose

Reasonable Cause & IRS Tax Penalties: When a non-willful taxpayer faces potential penalties for failing to comply with the Internal Revenue Code, they may be penalized by the IRS. The taxpayer may be able to avoid, minimize, or abate the penalties if the taxpayer can establish reasonable cause. Ideally, it is better for the taxpayer to avoid the penalty than it is to abate the penalty — but that is not always an option — especially if they received an automatic assessed penalty for 3520, 3520-A, 5471, or 8938.

When a taxpayer seeks to avoid the penalty, they should submit a detailed Reasonable Cause statement package before the penalties are issued.

If instead the taxpayer has already been charged with a penalty, they have a much steeper uphill battle to try to get those penalties removed by proving Reasonable Cause — and negating willful disregard. To read more, click here

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