If you owe tax to the IRS, it will not take long for its interest to exceed the tax amount. Paying all IRS taxes on time is a smart move, and making tax payments on time may be possible. In such a situation, you will have to pay the delinquent tax as a considerable penalty or interest. You may pay 0.5% as fines and interest on your monthly unpaid taxes.
Don’t worry; you do not need to pay your tax penalties. There are many ideas and ways to remove liabilities from your tax bill by the IRS tax agent. Read this article till the end to understand the different ways to remove penalties or interest from your tax bills. We have crafted all the relevant information and details to assist you ideally.
Let’s understand what the IRS is before learning the ways to remove or reduce tax penalties.
The Internal Revenue Service (IRS): Overview
The Internal Revenue Service, also known as the IRS, is a federal agency within the US government. The primary function of the IRS is to collect all types of taxes within the country and enforce various tax laws for it. An IRS tax agent is solely responsible for collecting and reporting individual and employment taxes. This IRS agency plays the most critical role in the internal tax regulation of the US. The IRS was first established in the US in 1862, at the time of Abraham Lincoln. This agency works under the United States Department of the Treasury. This is the reason that the IRS is very active and strict towards taxes within the whole country.
How can you remove penalties and interest from your IRS tax bill?
Once we understand the IRS, let us now know how you can remove interest and penalties from your tax bill. Removing interest and penalties from your tax bill is relatively easy if you have a valid reason.
Remember that we are talking only about the late penalty on tax and interest on the fine. With this, you will not get any exemption in your tariff, and IRS tax debt settlement is essential, on which it seems almost impossible to get any exemption.
The first three options below are ways to eliminate the penalty and interest before the tax payment is late. All other methods can remove them after getting a penalty and tax interest.
Complete your tax payment on time
It may sound elementary, but it is one of the most effective and reasonable methods. If you want to avoid any penalties and interest, pay your tax on time. With this, you will not have to pay any tax penalties. You can give timely information, fill in accurate returns, etc. to avoid penalties.
Apply for a Time Extension
If you couldn’t pay tax on time, you could apply for an extension of time to file for your IRS tax debt settlement. The IRS gives you a time, within which you have to pay your tax without penalty and interest. The time extension does not extend the time of tax payment to you but gives you a fixed time limit. Within this time frame, you have to pay all your taxes.
Set up a monthly plan
If the amount of your tax is very high but you cannot pay it all at once, the IRS also gives you this option. The IRS allows taxpayers to enter into different types of installation agreements. It will eliminate some of your penalties and reduce your liability and interest.
Statutory exception for penalties
The IRS allows you to waive your interest and penalty through various methods for specific reasons. The statutory exception comes at the top of these. You can seek a penalty exception for being late in tax payment because of some uncertain problem. Some examples of such statutory exceptions can be disaster relief or combat zone relief.
It is a rare method of removing US tax penalties and interest, which is only sometimes possible. Within this penalty relief, you must submit all legal and authentic documents to the IRS to prove the error committed by the IRS. The IRS removes all your penalties and interest if all your reports, documents, and claims prove accurate.
Acceptable and reasonable cause
The most well-known way to get your tax penalty waived by the IRS is to give a reasonable cause. We mean reasons that the IRS accepts. Most people choose this option to get the penalty removed. In your likely case, you must prove to the IRS that you did not intentionally ignore the tax. To get your penalty removed, the IRS must understand all your documents, facts, and situations.
Administrative waiver: FTA
In certain circumstances, the IRS can waive your penalty at the administrative level, known as administrative waiver relief. First-time abatement is the most popular and straightforward method of this administrative waiver relief. If you have yet to make a mistake in paying taxes in the last three years, the IRS can remove your penalty. In other words, this is the easiest and most acceptable way to get the penalty removed. You can easily remove your tax penalty from the IRS by calling your compliance unit.
Thus, you can get your tax penalty and interest removed by any of the above methods. Above all, remember, your one act of carelessness can land you in IRS tax debt in a terrible way. To get out of the hassle of this tax, follow all the rules and take appropriate action when needed.
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