It can be quite a shock to discover that the amount of back taxes owed is double the original amount expected since the IRS adds on penalties and interest to back taxes.
The IRS is most likely to provide an abatement of penalties which means the IRS will reduce or eliminate the penalties and you will achieve a measure of tax relief. A penalty abatement can be very beneficial if you can provide an adequate reason as to why you were not able to pay your taxes or were unable to file your taxes. A penalty abatement not only wipes out your penalties but also helps you reduce your back taxes and IRS debt.
There are three ways to present your case to the IRS resulting in abatement. First, you can provide the IRS with a written statement of a few paragraphs explaining your case; second, you can set up a verbal interview with the IRS; or third, you can simply provide an IRS 843 form which provides a shortened statement of your case. Whichever option suits you best, it is not to be taken in your own hands. These procedures are far too complicated for the average person to combat. You will require professional assistance. There are certain guidelines and wording that you need to use when it comes to dealing with the IRS. Only experts are able to deal with these matters.
Did you make any efforts to fix the tax problem? If you notified the IRS immediately of the reason why you were unable to pay your IRS debt, it will help tremendously to with your tax resolution. Did you try to pay a smaller amount that you could actually afford? Documentation is your best proof. You need to explain what went wrong through paper and documents. There are several instances in which an abatement is provided:
· If your records were destroyed and it was not in your control
· If a natural disaster damaged your ability to pay taxes & make money
· If your business was the victim of a crime
· Theft which caused loss of your records
· Prolonged unemployment