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Houston IRS Penalty Relief

A woman computing how much she owes to the IRS with a calculator and a pen and paper.

Millions of people every year get a notice from the IRS that they have not paid what they owe. These notices are based on the agency’s records, or sometimes, upon an assessment that the agency itself made which may be unfair. A surprising number of these people think that they have no recourse when this happens, no matter how incorrect the assessment may be.

Fear not. In many cases you do in fact have options. In some cases you can file an amended return to correct the IRS errors. In some cases you may be able to work out a payment plan. Sometimes you might agree to a reduced amount. Finally, you may be able to see some of those fees and penalties abated. Getting these remedies in place, however, can require knowledgeable and experienced help.

At Instant Tax Solutions, we know the strategies for removing, abating, and even eliminating penalties and past-due amounts. If you are ready to take action and get your finances squared away, we are ready to provide the options you need. Call us today at (888) 921-3781 or contact us online for a free no-obligation appointment.

Options for Houston IRS Interest Charges Removal

The IRS, in the end, wants people to pay the amount they owe, on time. The threat of interest, fees, and penalties is designed to frighten people into paying what they owe. Penalties applied by the IRS also include interest and fees. This can all seem overwhelming as it stacks up. What many people do not realize is that removing the penalties also removes the interest, so just as quickly as it stacks up, it can also abate.

The agency calculates penalties based on how overdue your taxes are. It can be applied if you file a tax return but do not pay the full amount, or if you are caught not reporting taxable income. The interest and fees accrue the longer you go without paying. This is why it is important to take action quickly. Penalties, however, will not exceed 25% of the unpaid back taxes you owe.

It is also important to know, however, that you cannot simply have the interest waived and keep the penalties. You must remove the penalties to get rid of the interest. The IRS itself clarifies that the law does not permit them to eliminate interest without also removing the associated penalties.

Houston IRS Penalty Waiver Strategies

The IRS offers several remedies for removing penalties and their associated fees and interest. Each of these carries certain requirements you must meet, and Instant Tax Solutions is ready to help you understand your options and select the right strategy for you. Essentially, the agency offers four main forms of penalty relief:

  • First-time penalty abate and administrative waiver
  • Reasonable cause
  • Statutory exception
  • Filing an adjusted return

First Time Penalty Abate and Administrative Waiver

Also called penalty relief by administrative waiver, this form of relief is the most common form of administrative penalty relief available to both individuals and businesses. It is available to those who failed to file a tax return and for failure to pay tax returns if you miss the due date for paying the taxes you report, or you fail to report taxable income. It is also available if tax is not correctly deposited.

The big key to this form of penalty waiver is that you must have no other tax penalties and have a history of compliance in the past. You may also qualify for first time penalty abatement if you have not had at least four failure to deposit waiver codes over the past three years or the penalty in question does not apply to the Electronic Federal Tax Payment System.

Penalty Relief for Reasonable Cause

Penalty for reasonable cause means that you acted in good faith to pay your taxes and a simple mistake led to underpayment or failure to pay. This form of abatement is determined individually for each case and rather than having very specific qualifications, the agency looks at the entire situation before making a decision.

This is because what constitutes “reasonable cause” depends largely on the specifics of the penalty you owe. To qualify for this form of relief, you must prove that you showed prudent care in attempting to file and pay, but still failed to meet your deadline. Some examples of reasons the IRS may take into account include, but may not be limited to:

  • Natural disaster
  • Lack of access to records
  • Civil disturbances
  • Death or severe illness
  • Issues with the deposit, payment, or filing systems
  • Some accuracy-related penalties
  • Some informational penalties

Mistakes, oversight, inability to pay, ignorance of the rules, or even dependence on a tax professional to file do not qualify as excuses for this form of relief.

Penalty Relief Due to Statutory Exception

Statutory exceptions that provide penalty relief mean that you fall under an exception under the tax law. These are among the rarest forms of exception offered. Just a few of the statutory exceptions that may qualify you for relief include:

  • You received inaccurate instructions from the IRS
  • You mailed your taxes on time, but delivery was delayed
  • You filed your taxes from a combat zone
  • You live in a federal disaster area

This form of penalty relief requires proof that you fall into the given exception. You must be able, for example, to provide the incorrect written instructions as well as explaining how you relied on those instructions. If you mailed or filed on time you must provide documentation that it was properly submitted and subsequently delayed. Those who live in disaster areas or combat zones must show where they live and document the circumstances.

Filing an Adjusted Return

Another option for IRS interest charges removal is to file an adjusted return. You may file an adjusted tax return for any year during the past three years. Doing so may allow you to apply credits or tax deductions that you did not apply the first time around. In some cases, these deductions can bring your tax burden down below the additional amount the IRS says you owe, eliminating your tax obligations and by extension, the penalties that go with them.

This can be complicated, however, and seeking help from a qualified tax professional is advised. At Instant Tax Solutions, our expert agents may be able to find deductions for which you did not even know you were eligible.

Requesting IRS Penalty Relief

Remember, when you get IRS penalty relief, it also carries IRS interest charges removal. This can significantly reduce the amount you owe the government. To begin the process of requesting penalty relief, consult the IRS notice of the penalties. This notice should include instructions on the next steps to take. In some cases, you may be able to make a request by calling the IRS. This can be the fastest way to get approved.

If you cannot get approval over the phone, you can file Form 843: Claim for Refund and Request for Abatement, which is available at the website. In some cases, you may receive a notice that your request for relief has been denied. If this is the case, you need not panic. You can take steps to appeal this decision.

Understanding IRS Penalty Relief

The first step in getting IRS penalty relief is understanding which penalties are eligible to be removed. These include:

  • Information Return: when you failed to provide a requested payee statement or information return form in a timely manner.
  • Failure to Pay: when you missed a payment due date whether it’s a year-end tax payment, estimated quarterly payment, or other contribution.
  • Failure to File: when you simply do not file your tax return or other documents on time and have not applied for an extension.
  • Inaccurate Payments: when you underpay your taxes due to under-reporting your income or claim deductions to which you were not entitled.
  • Dishonored Check: when your payment check “bounces,” or does not clear
  • Other Penalties, Case-by-Case: These can include employers failing to deposit taxes, companies that underpay estimated tax, or other circumstances.

Why Seek Help for IRS Penalty Removal?

When you seek help from Instant Tax Services, we may not only be able to help you avoid and abate penalties, but we may be able to help you get relief from your tax burden in general. Some of the options for doing so include:

  • Offer in Compromise: when you negotiate a reduced fee that the IRS agrees to accept as payment in full
  • Installment Payments: when you work out a payment plan for your debt
  • Currently not Collectible: when you can show that you simply to not have the money to pay right now, the IRS may offer a grace period to get back on your feet
  • Amended Tax Return: as mentioned above, an amended return can sometimes reduce your obligations, or even eliminate them altogether.

Seeking these forms of IRS penalty waivers or tax relief, however, requires someone with knowledge of how the system works and the experience to argue that you deserve it. Instant Tax Solutions has over a decade of experience and tens of thousands of clients. We are a dedicated partner who is ready to help you get back on track today.

Contact Instant Tax Solutions Today

Instant Tax Solutions has experience and expertise with all forms of IRS penalty relief. We are ready to help you not only reduce your tax obligations but to help you with a plan for your financial future. Call (888) 921-3781 or contact us online to schedule a free consultation today.

Why am I getting IRS Interest and Penalty Charges?

The IRS has outlined all of their penalties and charges in the Internal Revenue Code. These are supposed to encourage “voluntary compliance” from taxpayers. They have over one-hundred and forty different federal tax penalties that can be assessed for a wide variety of issues including; tax fraud, accuracy related penalties, late filing penalties, late payment penalties, failing to pay a tax, and filing a frivolous return.

Fraud penalties

As mentioned previously, a fraudulent return penalty is related to someone failing to report income or underpaying their income tax. These actions constitute fraud in every state and if caught, the fine is quite severe. The underpayment penalty is 75% of the under paid tax amount and the penalty also has a 75% maximum rate. This is a very serious and costly charge and if you have questions, ask your tax specialist because they know the laws and codes.

Accuracy penalties

The accuracy-related penalty is related to personal or income information being incorrect. This impedes the efforts of the IRS to process the return and this conduct will be severely penalized and enforced. If you omit a social security number or use a fake number, you are committing a serious error and it will cause the IRS to come after you with great fervor. You will end up owing for not filing a truthful statement on your income tax return.

The importance of dotting your I’s and crossing your T’s

As you can see it is very important to file an accurate tax return in a timely manner. You can incur an IRS penalty for any number or reasons, if you find this to be the case then consult with a tax specialist to find out what your options are. There are many inclusions in the tax codes that may limit your liability in certain circumstances. You may be able to prove a case for an exception to your fines and penalties, in which case you may be able to have your penalties lessened or even erased totally. Your tax professional will review your tax returns and determine if any of these conditions are optional for your case.

Information for self-employed individuals

If you believe you are going to owe more taxes the following year then you have two options. If you are self-employed or expect your investment earnings to be minor, then provide your tax specialist with a new W-4. If you allow for extra with-holdings then you may withhold more taxes from your paycheck. If this is not a viable option for you then you can also begin making “estimated tax payments”. This is done by having you tax specialist file a form called a 1040-ES. You can begin making quarterly estimated tax payments and hopefully this will offset IRS underpayment penalties that might be encountered. Either way if you owe money, your tax specialist can go over what options will work best for you.

What You Need to Know About these IRS Fines

Penalties and How to Avoid ThemEvery year working people know the drill about filing an income tax return. Whether you owe money or are due a refund, you are still responsible for filing a tax return and complying with the tax codes and laws. Some people file their own tax returns while some people will retain the assistance of a tax professional to file their yearly income tax returns for them. If you find that you are in a position to owe additional money, then if you don’t already have tax professional then you definitely need to get one.

Tax penalties: What you do not know can cost you!

An initial penalty can seem like a very intimidating situation, but you can find out if you are eligible for hardship considerations. This can mean the difference between owing possibly thousands of dollars and maybe being able to have the tax penalty forgiven or reduced. If you are not sure where to begin, then talk to your tax professional and explain the situation. Once they know what is going on, they can apprise you of your options and responsibilities.

If you owe back taxes to the government, they will assist you in assessing your penalty and figure in the interest on the amount as well. However, it is very simple if you do not owe any money then there is no fine. There are three types of penalties: failure-to-file, failure-to-pay and interest. The differences between the fines are something that your tax professional can explain to you in detail. IRS penalties are calculated quite differently so if you are unsure then don’t worry your tax professional will also know about the process and take care of it for you.

How IRS Interest and Penalties are assessed

If you find yourself in a position of owing an IRS late tax penalty, then it is best to take care of it as quickly as possible. Your tax professional will help you and will gather all the information you need. If you are the subject of a failure-to-file penalty, this fine is calculated from the deadline date of the tax return. It is 5% per month that the tax return is late and this IRS late filing penalty has a maximum of 25% of the balance due to the IRS.

A failure-to-pay penalty is calculated upon the amount of money you owe if you have underpaid the IRS. The minimum amount of .05% is assessed for each month you owe the taxes, and will keep being added on until you pay off the fines. This amount may not appear to be much, but the longer it goes on and when factored into any other amounts you owe, you can have a large debt built up before you know it.

Interesting facts about interest rates

As for any interest you may owe, this is based on how much tax money you owe. Interest rates change quarterly and will accrue quite rapidly. Once you are given an IRS tax penalty, you can expect the amount you owe is going to fluctuate because of the interest involved. The rate of interest is added to your tax fine daily and the rate is currently at 5%, which is a yearly rate. There are lessons to be learned when dealing with the IRS interest and penalties. If you find you may need additional time in filing a tax return then, have your specialist file an extension for you. No matter what happens; if you have a tax professional on your side you are more likely to have a better outcome. They will deal with all the information and work with the IRS on your behalf and are adept at all kinds of tax situations.

Paying the Charges

Paying Your Penalties and FeesIf you do not pay your taxes, you will more than likely face stricter charges with interest and other fees attached.  However, these circumstances do not have to ruin your life. You can get help and information regarding paying back late IRS tax penalties and interest. If you knowingly submit a false tax return or you do not pay the full amount owed, this can be constituted as tax fraud. You can be sanctioned with fraud charges or even criminal charges.

Failure-to-file penalty information

failure-to-file penalty is accessed when taxpayers do not file their income tax return by the due date. The penalty rate is 5% of the amount of the tax unpaid accessed each month. The rate cannot be more than 25% of the unpaid tax balance, but the amount due can be reduced if you experience both a failure-to file penalty along with a failure-to-pay penalty. If your return is more than sixty days past due, the IRS tax penalty will be not less than one hundred dollars or 100% of the unpaid tax balance. However, if you are experiencing financial difficulties in paying back your IRS tax penalties and interest, an IRS tax professional may be able to get the amount reduced or eliminated by showing justifiable cause for failing to file the taxes on time.

Differences between failure-to-file and failure-to-pay penalties

There is a big difference between the failure-to-file penalty and the failure-to-pay penalty. The failure-to-pay penalty is a penalty of ½ to 1% of your unpaid income tax liability. The interest accrues on a monthly basis and will continue to accrue if you do not do something about it. The failure-to-pay penalty cannot be more than 25% of the unpaid tax debt. Again, a tax professional can have this amount reduced or remove IRS charges if they can prove you had a justifiable reason for not paying the late fees and interest.

There is an additional penalty for a frivolous return. This happens if you submit a tax return that does not contain enough information to process. This penalty is $500 and is added to any other applicable IRS charges.

Accuracy-related penalty

An accuracy-related penalty is another penalty that can be filed against you. This is assessed to taxpayers who do not adhere to the tax laws or do not report income information accurately. The tax penalty rate is 20% and cannot exceed 20% of the unpaid income tax owed. If you have any questions about these or other fees the government has tacked on, please give our experts a call to answer any questions you may still have.

Income Tax: Keeping Up to Date on Your Earnings

If you work then you have a legal responsibility to pay income taxes on a yearly basis. It is advisable for you to file and pay your taxes when they come due. If you are unable to do this then you will likely be assessed an income tax related penalty. You will receive a statement or notice from the IRS informing you of what they have charged, and why they did. If you have questions concerning your notice, please give us a call to learn more.

Understanding Income Tax Penalties

The penalty will not only include the current amount owed, it will also include interest applied to the amount as well. If you can’t pay by the due date then expect an income tax penalty to be filed against you. Even if you or your tax attorney has filed for an extension, you will still be penalized with interest charges on your balance. The amount of interest is determined by the amount you owe, the federal short term rate and an additional charge of 3 percent.

Fines, Penalties, and Interest

There will also be additional IRS charges for late, negligent or failure to file tax returns. These are also subjected to an income tax charge with interest. The interest rate will accrue from the date of your return and will compound rather quickly. When you are late in filing your tax return and in making any payments, you will be charged an interest rate of 0.5% on a monthly basis. The amount maximum is 25% of the balance owed and is applicable to all money that is owed.

Your tax attorney will explain that you are also liable for an income tax fee if you file a late return. Again, the rate is 5% of the outstanding balance and is charged on a monthly basis. Unless you can prove that you have exigent circumstances and are not able to pay the amount you owe.  In that case, you can possibly have your tax debt forgiven or reduced. If you give the information to your tax attorney, they can present this evidence to the IRS and negotiate the matter for you personally.

Did you overpay or underpay?

There is also an underpayment charge for underpaying your income taxes. The income tax charge for this type of situation is called a failure-to-pay penalty. It applies from the date that the balance was underpaid and like the other fines it accrues and builds on a monthly basis. Each IRS payment is subject to different charges, so you may still be responsible for an earlier payment as well. Even if you believe you paid the amount.  Or even if you have a refund coming, you may still incur a fee. Your tax attorney will assist you and figure out any amount that is due and what you are responsible for.

What is a Trust Fund Recovery?

Trust Fund RecoveryHave you received notices from the IRS stating that you have not turned in your 941 payroll tax return? Or maybe they have not received them? Are you repaying an outstanding charge or not able to make payments on your payroll taxes? Did you forget to file a return? Are you having financial difficulties? Are you being threatened with a garnishment or levy against your bank account? Or are you possibly facing a Trust Fund Recovery Penalty because of begin personally responsible for the debt? If the answer to any of these questions is yes, then you most definitely need our assistance.

Understanding the Trust Fund Recovery Penalty

As with any problem you encounter, no amount of sidestepping or creative avoidance is going to alleviate the situation. Avoiding it altogether is not an option and will only result in the situation growing more and more out of control. The IRS is very adept at debt collection and they will get their money due, one way or another. That one way could be through a Trust Fund Recovery Penalty. They look for who holds responsibility for the tax debt and then begin the collection process immediately. They issue fines that grow daily with interest fees.

Internal Revenue Code 6672

As part of the debt collection process the IRS will put levies against any and all assets you have personally, as well as any possible business assets. This type of charge is outlined in the Internal Revenue Codes Section 6672 (a). It is outlined as being a 100% penalty, and is assessed in the event that “trust funds” are not paid. Trust funds are considered as income withholding that an employer is required by law to deduct from employee payroll checks. These funds include; federal and state taxes, Social Security and Medicare taxes as well. The amount is held in trust until it is to be paid to the federal government.

Who is liable for paying the penalty?

Who is responsible for paying this type of charge? This would be the person who has the power to make the payroll deductions, but who fails to make the required payment. This may be one person or a group of people as a collective. This person may be the company CEO (Chief Executive Officer), a corporate employee, a corporation director or primary shareholder, a board of trustee member of a nonprofit group or any other person who has the authority over the disbursement of payroll funds.

The IRS can levy this against anyone. However, they will determine according to their guidelines that are most financially responsible and go after them. They have outlined rules governing who they determine who is responsible: this person must have had knowledge about the unpaid taxes, have misused the funds to keep the business afloat or disbursed the funds to other creditors, and there are other standards in addition to these. A tax attorney is going to know everything about how to handle this situation and will provide you with proper guidance in the event you are fined.

What can you do to prove your innocence?

If you are on the receiving end of one of these, there are many questions you will have. Such as do you know what your rights are? Are you the one who is legally responsible for the penalty or should it be someone else? Do you know if the IRS has assessed the correct amount of “Trust Funds”? Do you qualify for an Offer of Compromise? Can you make the payment in full or do you need an installment plan? Will they seize your home, property or other assets? All these questions can be answered by a qualified tax professional that will look out for your best interests. We at Instant Tax Solutions can do just that for you!

Related Tax Problems

Un-Edited Client Reviews

Linda C.
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The experience was a painless one with no hassles of hoops to jump. I had a debt of $16,000.00 and ended up paying $1,700.00. They handled everything from start to end with a very positive resolution. The entire staff was very helpful and courteous through the process with no gimmicks. Keep on with the GREAT work.

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I just want to say what outstanding service I received from Instant Tax Solutions. They helped us through a very hard time in our lives when we needed it most. We can’t thank them enough for all their hard work and dedication. They truly are the best in the business at getting people out of Tax troubles, and we would refer them to anyone that are having hard times and in need of help from the IRS.

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I had ten years of taxes I hadn’t filed. I was really nervous and didn’t know what to do. I checked the IRS website for tips on selecting a company. Instant Tax Solutions had a good rating and made me feel comfortable working with them. A burden has been lifted from my shoulders. Thank you Instant Tax Solutions!

Kathleen R.
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I had a very serious tax problem, I was basically looking at the end of my life as I knew it. I called Instant Tax Solutions and within 3 days my levy was released and the monthly installment agreement was far better then I could have ever hoped for.

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I owed the IRS $160,000 in back taxes. I had a wage garnishment and my case was assigned to a Revenue Officer. I did not know what to do. Instant Tax Solutions was able to get my garnishment before my next paycheck. When all was said and done, they saved me over $100,000.

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Armando & Sofia M.
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