Any business owner who has ever owed money to the IRS can confirm it’s difficult to pay off this type of debt in full. This is because interest and other penalties are added to the original tax debt and is why tax experts recommend paying off business tax debts as quickly as possible. The IRS has a variety of very unpleasant collection techniques at their disposal. These techniques include seizure and freezing of bank accounts, property liens, and in some cases, the ability to seize business property.
It's important to understand that it's not just interest that's increasing a tax bill. The IRS also adds civil penalties and fines that can make the amount owed grow very quickly. This may make it seem impossible to ever escape from the endless loop of increasing debt.
What can be done to remedy the situation? There are different options available to businesses that can provide relief from tax debt. Penalty abatement is one of these. The Utah tax lawyers at Pearson Butler are here to assert your rights and to protect your company’s interests in these proceedings, which may involve varying approaches based on your specific situation and needs. With the necessary experience and understanding of ever-changing tax laws, the firm is positioned to provide the level of counsel you deserve.
To find out more about penalty abatement for your business tax debt, call (800) 265-2314 or contact Pearson Butler online.
Understanding Penalty Abatement for Businesses
The Internal Revenue Code allows for the removal of penalties associated with the late filing of taxes, the late payment of taxes, or the late deposit of taxes. This is referred to as penalty abatement.
There are three primary situations where a business may qualify for penalty abatement:
- Reasonable cause, such as a natural disaster, accident, or serious illness that impacted a company’s ability to pay its tax debt, despite reasonable efforts to do so.
- This is the first time that the business failed to file a tax return, pay on time, or deposit taxes, under the IRS’s First Time Penalty Abatement policy.
- The penalty was assessed because the IRS provided incorrect advice, in writing, to the business.
There's a cap on the amount the IRS will abate, and this amount isn't published. This is a place where a tax resolution law firm may be helpful because they have experience working with the IRS and have an idea what will realistically be waived from a business’s tax debt. Pearson Butler’s Utah tax relief lawyers will know how to best approach your case.
The Penalty Abatement Request Process
The penalty abatement process begins when a business files IRS Form 843, and the only requirement is that the request must be made in writing. It then goes to an IRS service center. Voluntarily stepping up and trying to settle the issue and acting responsibly to pay the debt will help the case. Be sure to include any supporting documents and carefully explain the issue that caused your company’s taxes not to be paid on time.
An appeals officer is assigned to each case, and it's his or her decision whether the situation warrants a penalty abatement or installment arrangement. This is a rare opportunity to put a human face on the issue, explain the reasons behind not being able to pay in full, and show the appeals officer a plan that will help resolve the situation.
The IRS generally uses The Reasonable Cause Assistant, which is an automated program allegedly designed to simplify the process of who is eligible for the penalty abatement process. However, some glitches in the software have caused controversy. A report has stated that in 2011, 55% of all the requests that went through the system were given an incorrect determination. Therefore, it's not terribly unusual for an applicant to get a denial even if the business really is eligible for a penalty abatement. Pearson Butler may be able to help you file an appeal, if your request was denied.
Experienced Penalty Abatement Counsel in Utah
Working with the IRS can be overwhelming and confusing. Pearson Butler’s tax attorneys are experienced with tax issues, understand all the paperwork, and are familiar with negotiating with the IRS on penalty abatements. Clients are not simply assigned to paralegals or given cookie-cutter representation that does not truly address their legal needs. Clients meet with attorneys who listen carefully to their situation and help create plans that will best serve their companies’ needs.
To discuss your situation and needs, call (800) 265-2314 or contact Pearson Butler online. Pearson Butler proudly serves all of Utah from offices in South Jordan, Bountiful, and Utah County.