You may have heard of a first-time penalty abatement (FTA) waiver. When taxes haven’t been filed or paid, the IRS allows an “abatement” that removes penalties applied to the taxpayer. The IRS would prefer to help people pay their tax debt, and the FTA is one tool you can use if you receive a penalty for failure to file or pay on time. If you follow the rules for abatement, relief is available.
The FTA waiver is available for taxpayers with no previous tax penalties in the last three years who have filed and paid all previous returns. In some cases, if you have an extension or payment arrangement for back taxes, you can still apply for the penalty abatement waiver. If you’ve been consistent with addressing your tax situations up until this point, the IRS will cut you some slack through the waiver.
What are the criteria for the FTA waiver?
– Your penalty must be a failure to file, failure to pay, or failure to deposit. Penalties in other categories don’t qualify.
– All tax return filings are current.
– The applicant for the waiver has either zero overdue taxes or a payment agreement in place.
– No penalties in the previous three years.
Sometimes circumstances outside your control can result in eligibility for an FTA waiver. These situations include:
– Death of a family member
– A lack of records made it difficult for you to calculate the proper tax amount.
– There was a civil disturbance that prohibited you from making a payment.
– You received bad advice from the IRS.
– A tax professional gave you incorrect information.
– A natural disaster (flood, fire, etc.) destroyed your tax records.
How do I request an FTA waiver?
To apply for first-time penalty abatement, you’ll use IRS Form 843. It’s important that you consult your CPA and tax attorney when undergoing this process. They can provide you with invaluable advice and ensure your case has good standing to obtain the abatement.
After filing Form 843, you should hear back from the IRS within 3-4 months about their decision. Everyone who is penalized for first-year “failure-to-file” (FTF) and first-year “failure-to-pay” (FTP) is eligible for the first-time penalty abatement regardless of eligibility for a “reasonable cause” penalty abatement.
If you’re facing tax penalties and need more information on IRS penalty abatement, including other options, contact Estess CPAs today at either our Belle Chasse or Luling office listed below.
Estess & Associates, LLC
Small Business Services
7822 Highway 23
Belle Chasse, LA 70037
Estess & Company, LLC
Certified Public Accountants
128 Lakewood Drive
Luling, LA 70070
About Estess CPAs
Estess CPAs provide permanent solutions to IRS and state tax problems for taxpayers. Since 2001. Estess CPAs have been helping businesses and individuals succeed. With two locations to serve you, Estess CPAs have the expertise and credentials of larger firms without compromising the personal service our clients have come to appreciate.
At Estess CPAs, we believe information and planning enhance success. Specializing in small business solutions, we believe the key to successfully managing any business starts with well-informed accounting and payroll systems. Accurate and timely data empowers companies to analyze and react to upcoming needs and changes. Our professionals are experts at keeping accounting systems and payroll processes running smoothly.