Penalty Abatement

The IRS will assess penalties for a variety of reasons; such as failure-to-file, failure-to-pay, accuracy related penalties, etc.  Penalties and interest will often significantly increase your liability.  The circumstances under which a penalty abatement will be granted differ depending on which type of penalty has been assessed.

The IRS will grant a penalty abatement if you can show you had "reasonable cause" for not filing or paying your taxes.  The IRS has granted penalty abatement requests for some of the following reasons:

  • Mental or physical illness;
  • Destruction or theft of your records;
  • Natural Disaster;
  • Family problems including divorce or death of a close family member;
  • Major disruption to your life, including incarceration or long term unemployment;
  • Incorrect advice from tax professional;
  • Erroneous written advice from the IRS.


Sometimes the IRS will also require you to show that your failure to follow the tax laws was not due to willful neglect and that you acted in good faith.

Businesses must show reasonable cause by proving that they exercised ordinary business care and prudence but were still unable to follow the tax laws.

10 Tips to Avoid an IRS Audit

This is a list of the best ways to avoid an IRS Audit:

1Double check for math errors: Making mathematical errors is one way to trigger an audit...

2Follow the directions on the forms, fill out all required spaces, and make sure your entries are legible: When filling out your return it is better to put in a zero or a dash mark...

3Be careful if you claim the home office deduction: The IRS has found that some taxpayers that claim the home office deduction tend to inflate their deductions...