Real Solutions to IRS Debt and Related Problems

IRS Penalty FAQ

Q: What Are the Most Common IRS Penalties?

A: There are three penalties that the IRS assesses most often. Failure to file, failure to pay, and understatement penalties.

Q: How Will I Find out About an IRS Penalty?

A: When the IRS assesses a penalty, it sends a notice. If you don't have the notice, you can ask the IRS for a history of the accounting year and it will show which penalties have been assessed.

Q: What if I Choose Not to Pay the IRS Penalty?

A: If the IRS assesses a penalty, that penalty becomes part of the underlying debt and the IRS will take collection action on it if ignored.

Q: Can I ask the IRS to Forgive or Abate the Penalty?

A: Yes. there are a few different ways to request that an IRS penalty be removed.

Q: What Is IRS First Time Penalty Abatement?

A:In a limited circumstance, the IRS will abate a penalty for failure to file, failure to deposit, or failure to pay just because you asked.

Q: Can I Ask the IRS Not to Assess a Penalty Before It Does?

A: Yes. In certain audit and CP2000 situations, it will make sense to request that the IRS refrain from assessing the IRS penalty.

Q: Can IRS Appeals Request a Statute of Limitation Extension?

A: Yes. The IRS only has a specific period to finalize an audit. If you appeal the decision, appeals may ask you to extend that date.

Q: How Likely Is It that I'll Be Audited?

A: Overall audit odds have been low in recent years. But there are certain entities and items on tax returns that increase the odds of audit.

Q: What Are Considered Some Audit "Red Flags"?

A: There are certain types of returns and items in returns that are considered to be more likely to cause an audit.

Q: Can Someone "Turn Me In" for IRS Audit?

A: Yes. The IRS accepts “ whistleblower” information. The whistleblower will submit a form to the IRS called in the information referral form. The IRS encourages it.

Q: If I've Been Assigned a Field Auditor, What Should I Be Aware Of?

A: In-person audits are typically more complex and serious. There are some items you should be aware of.

Q: Can I Take Care of An IRS Mail Audit by Faxing Information?

A: Yes. In fact, it's probably a preferred method if deadlines are near and you should follow up to ensure the fax was received.

Q: Can I File an IRS Tax Court Petition on My Own?

A: Many taxpayers file a petition with the U.S. tax court post-audit on their own. the tax court webpage provides some detailed information about the process.

Q: How Do I Appeal a Bad Audit Result?

A: An audit result can be appealed internally and to the U.S. tax court.