Surprise: you can reduce your tax bill with penalty abatement

How penalties and interest work The IRS has a certain set of rules and regulations that govern how people owe and pay their tax debt. Any violations of these published rules and regulations could lead to substantial penalties. Some of the most common penalties result from mistaken calculations of taxes owed or withholdings. There are also penalties for late payments and failures to submit paperwork. Interest is charged because the IRS decides how much money one was supposed to pay and how much interest they could have made on those funds when they were supposed to be in IRS coffers. It is a tactic designed to increase the incentive for a person to pay back what they owe as quickly as possible.

What to do Anyone who faces one of these penalties should consider an IRS penalty abatement. These are a set of special circumstances under which the IRS will waive or reduce what a person owes. Taxpayers can receive abatements if they are first-time offenders or if they are hit by exceptional circumstances such as a fire or flood. They may also receive an abatement if they can prove they were given inaccurate help by an official IRS agent. Even if a person qualifies for one of these abatements, they need to make sure that they act as soon as possible in order to stop penalties and interest from accruing.