Tax Penalties and Interest

In all tax liability cases, penalties and interest are assessed on the principle tax owed.  Interest also compounds against itself and against penalties.  This can cause a tax liability to grow out of control faster than a bad credit card.  Unfortunately, you cannot file for bankruptcy on most types of taxes, and the government has greater ability to collect its money than do credit card companies.

Penalty Abatements

A penalty may be abated, or withdrawn, if the taxpayer provides logical and compelling reasoning – in writing – for the issue that resulted in the liability.  The IRS will not reduce interest charges, but some states will, when properly requested by a taxpayer.  You must have Reasonable Cause Criteria for getting a penalty abatement, and then you must make a compelling case.   Even when you have a good case for a penalty abatement, there are no guaranties that the IRS will side with you. Therefore, you need to make the best possible argument for your case, or better yet, have a professional prepare your argument for you.

If you think that you have been wrongly charged penalties or interest, or might deserve a penalty reduction, please contact Larson Financial.  We can quickly assess your unique situation and options.