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When it comes to paying your taxes, the IRS takes its job very seriously. You might think you are lucky for a couple of years, but you will face the consequences once you are caught. For this reason, many people who have defaulted their taxes find themselves at a loss over what to do. If you are in a similar situation, worry not. There are things you can do to help your family and yourself. Here is one option that will work for you in a situation where you cannot pay your taxes on time.
Abatement Definition
What abatement does is take away the penalties against you because of the reasons above. You need to remember that this is a one-time thing, and you cannot file for abatement a second time. You can also not apply it to more than a year’s worth of penalties. For you to qualify for the waiver of penalties, you need to provide proof that you have been paying your taxes on time for at least three years before the default.
Abatement Qualifications
Apart from faithfully paying your taxes each year, the IRS will look at other things before qualifying you for abatement. You might have to convince them that you had a good reason for not being able to pay your taxes on time. In some situations, a lawyer’s help will come in handy since they know the paperwork required when it comes to proving you were unable to pay your taxes. Here are some of the top things that qualify as good reasons:
- Sudden illness
- Accidents
- Fires
- Natural disasters
- Inability to get your tax documents
- Mistakes made on tax documents
There are several things the IRS will look at when determining if you qualify for the program. Many people qualify for it, but since they have no idea that this is an option, they pay so many penalties. If you know that you went through a hard time or situation that prevented you from paying your taxes on time, reach out to the IRS and see if you can get the penalties waived.
Talk to the IRS
If you find yourself in a situation where you cannot pay your taxes, it is recommended that you talk to the IRS. Do not wait for them to get a hold of you before you start making excuses. Reaching out to them first shows that you are honest about your issue, and you stand a higher chance of them listening to you. You can file for a penalty abatement if you are a first-time defaulter. The qualifications for the first-time abatement include:
- You failed to file a tax return
- You have not paid your owed taxes
- You did not deposit
If you have been penalized because of any of these three issues, you will be given this one-time courtesy.
Benefits of an Abatement
Many people are struggling with penalties on their taxes because they did not know they had an option. Getting an abatement will help with this. The biggest advantage with this is, you are given more time to settle your taxes while the penalties added are removed. One thing you need to remember, however, is that the interest your taxes garner will still apply when you pay them. The only thing the abatement removes is the penalties.
How to Get an Abatement
To qualify for an abatement, you need to write a letter to the IRS. Mail your letter to the address listed by the IRS when they wrote to you concerning your late payment. Once your request is approved, expect to get an IRS letter 3502C or 3503C in your mail.
Conclusion
You are expected to file your taxes each year without fail. Not doing so might get you on the wrong side of the law. In situations where you delay paying your taxes, you can get an exemption on your tax penalties. It will go a long way to affect your credit score and the amount of money you will spend on paying taxes that year. Should you be late to file your taxes, reach out to the IRS and find out your options before you pay all those penalties.
