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Tax penalty abatement, part 1: proposed penalties

"Abatement" is a pretty multi-syllabic word. It generally means a reduction or lessening of something, but it can also mean a cancellation or removal.

As a result, there is an element of ambiguity implicit in the word "abatement." Indeed, its continued use by the IRS could be considered an example of the lack of clarity that occurs when complex words are used instead of more simple ones.

But the well-known principles of "The Elements of Style" about clear and concise writing are often violated in the field of tax administration.

In this two-part post, we will therefore discuss tax penalty abatement. Our goal will be to explain the concept in terms of simpler words like "removal" or "reduction."

As Forbes has reported, the IRS issues a lot of tax penalties. In Fiscal Year 2012, the IRS did this about 37 million times.

Assessing tax penalties is not necessarily a slam dunk for the agency, however. Taxpayers have a right to challenge the penalties.

This right is not merely a formal one either, in which going up against the IRS is virtually a no-win proposition. In many cases, taxpayers - often with help from their attorneys - are able to get the penalty removed.

In other cases, taxpayers may be able to get the penalties reduced.

In other words, the IRS sometimes imposes penalties improperly.

What is the process to be followed in seeking abatement of a tax penalty?

If the process is working the way it is supposed to, the IRS employee that you are dealing with will let you know what the proposed penalty is likely to be. Ideally, that would allow you to get the proper amount of the penalty resolved right from the outset, before it is formally assessed.

In part two of this post, we will discuss other ways to take on the IRS with the goal of getting a tax penalty reduced.

To learn more about our practice, please visit our page on tax penalty abatement.

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