Tax Penalties and Interest

Penalties and interest are assessed on all tax liabilities, based on the principal tax owed. The list of penalties that the IRS and state may charge is too large to detail. Interest rates charged on taxes also very widely by agency and for the type of tax owed.

Penalties and interest together 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.

Thinking about penalties and interest

The amount of penalties and interest that the IRS and State taxing authorities charge varies greatly depending upon the types of tax and the specific circumstances of the liability. Penalties and interest may ad a few percent to what you owe, or could double what you owe, depending upon many factors.

Penalty Abatements

A penalty may be abated reduced, or withdrawn, if the taxpayer provides logical and compelling reasoning – in writing – for the issue that resulted in the liability.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 charges penalties or interest, or might deserve a penalty reduction, contact Larson Financial. We can quickly assess your unique situation and options.

To resolve your tax problems, please contact Larson Financial today.

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