IRS website to provide guidance on handling penalty notices
The IRS has a new web page that contains helpful information for small businesses who receive a penalty notice. The IRS advises recipients of a penalty notice to review the notice for accurate information. Businesses may qualify for a penalty relief under certain circumstances. Penalties eligible for relief include:
- Failure to file a return
- Failure to pay timely
- Failure to deposit certain required taxes
- Other applicable penalties
Abatement of penalties may be available for the following reasons:
- Reasonable cause. This relief is generally granted when obligations could not be fulfilled due to circumstances beyond control (e.g., fire, death, serious illness)
- Statutory exceptions. This relief is provided by specific tax legislation that grants an exception.
- Administrative waiver. Administrative relief may be provided under IRS’s First Time Penalty Abatement policy
Businesses may consult the Penalty Appeal Online Self-Help Tool when receiving a penalty notice or letter denying a request for penalty relief.
The IRS does not abate interest assessments for reasonable cause or as first-time relief. The instructions for Form 843, Claim for Refund and Request for Abatement, mention the circumstances under which interest may be abated.
For more information, visit the IRS’s Penalties at a Glance web page.