Tax Penalty Relief
Many times, the IRS assesses more than just taxes and interest; it assesses penalties as well. Multiple penalties can be assessed in addition to the tax due for failure to file a tax return, failure to pay taxes, failure to properly report a tax liability, fraud, failure to properly report taxpayer information, and participation in a tax shelter. Penalties can be applied to income tax, employment taxes, excise taxes, estate and gift taxes and informational reporting violations.
The most common penalties include:
- Failure to file a return: This penalty applies to a taxpayer’s failure to file an income tax return, an estate or gift tax return, an excise tax return, withholding returns, employment tax returns and informational returns.
- Failure to pay taxes: This penalty applies to a taxpayer’s failure to pay income taxes, estate or gift taxes, excise taxes, withholding taxes and employment taxes.
- Failure to properly report a tax liability: This penalty applies to a taxpayer’s failure to properly report his income tax liability, estate or gift tax liability, excise tax liability, withholding tax liability and employment tax liability. This penalty is also known as the Accuracy-Related Penalty and can range from 20% to 40% of the tax due on the total amount of underreported income.
- Fraud penalties apply to any taxpayer’s fraudulent reporting of their tax liability, including: income tax liability, estate or gift tax liability, excise tax liability, withholding tax liability and employment tax liability. Civil fraud penalties can be up to 75% of the total tax due.
- Failure to properly report taxpayer information applies to anyone who provides incomplete or incorrect information to the IRS regarding their own tax liability or the tax liability of another.
- Tax shelter promoter penalties: This penalty may be applied against any person who organizes (or assists in the organization of) or participates in the sale of any interest in a tax shelter and, in connection therewith, makes (or causes another person to make) a statement with respect to the availability of any tax benefit by reason of participating in the tax shelter that the person knows or has reason to know is false or fraudulent as to any material matter. The amount of the penalty is $1,000 for each such activity or, if less, 100 percent of the gross income derived (or to be derived) by such person from such activity. This penalty is imposed in addition to any other applicable penalty.
At Thorn Law Group, we have successfully represented taxpayers in penalty disputes with the IRS and had taxpayers’ penalties reduced or removed altogether. If you would like to pursue tax penalty relief, please contact Kevin E. Thorn at 202 349-4033 for a confidential consultation.