This course will guide you through the process of helping clients who have run afoul of the IRS resulting in penalty assessment. We will discuss the tax penalties we see most often, what causes the assessment of the penalty and what remedies, if any, can be employed to assist our clients in gaining removal of those penalties when they qualify. In many scenarios, there are steps you can take to help your client remove those penalties. We will study and discuss how to get the most common penalties removed. Finally, we will give tax professionals and attorneys strategies to assist in getting those penalties removed or reduced by the IRS.
What Is An IRS Penalty?
The IRS has wide latitude in imposing penalties for a number of tax-related infractions. The IRS can impose penalties for late filing, underpayment or non-payment of taxes and failure to file forms correctly or on time. IRS guidelines state that reasonable cause may be established if your failure was due to bona fide error caused by reasonable cause rather than willful neglect. The penalty will be abated only if reasonable cause is shown for not providing information timely and properly. Reasonable cause must be adequately documented with concrete evidence of reasonable care and good faith on behalf of the taxpayer. As a professional, it will be your privilege to guide your client through the process of removing penalties.
What Is Reasonable Cause?
The cornerstone of penalty abatement is demonstrating reasonable cause. Reasonable cause requires you to demonstrate that you exercised ordinary business care and prudence in determining your tax obligations. This course will help you grasp and have a strategy to demonstrate reasonable cause on behalf of your clients in a variety of ways such as:
1) An honest mistake
2) A misunderstanding of law or facts on your clients’ part
3) Under special circumstances; due to exigent circumstances beyond your client’s control; or through no fault or negligence on their part.
Remedies for Penalty Waivers
There are two remedies for penalty waivers: a penalty abatement and penalty mitigation. A penalty abatement is when an attorney or tax professional successfully demonstrates that a client may qualify for removal of penalties from assessments. Penalty mitigation is when a tax attorney or professional is able to reduce penalties based on whether or not you can prove that you exercised reasonable cause (as defined by IRS code) for your failure to file or pay. Both penalty abatements and penalty mitigations require an in-depth knowledge of tax law, including case law, as well as excellent communication skills with clients. We’ll work in this course to help you develop those skills.