A little-known administrative waiver program set forth under the Reasonable Cause Assistant provisions of the Internal Revenue Manual may help people late with filing or paying taxes for the first time escape additional penalties. The program, in place since 2001, is known as “first-time abate,” and it is a veritable “get out of jail free” card for otherwise innocent business and personal tax filers who can make a reasonable cause argument as to why their taxes were untimely.
Seeing as IRS penalties can sometimes add up to way more than the original tax bill itself, and they come with other nasty potential consequences – including a higher possibility of audits in the future – it is definitely worth your while to examine alternatives and mitigating programs like these. The “first-time abate” program isn’t for everyone, though, and it really is designed for one-offs who are otherwise have been in compliance with tax rules and regulations.
An abatement under this waiver program is an option for you if you are running late with a filing or payment and have an otherwise clean record (with no late filings, penalty assessments or unfavorable audits) in the past three years. You may still be eligible even if you are currently set up with an installment payment program for tax payments, provided your account is current and in good standing. You may also still be eligible if you had a penalty or fine assessed in the previous three years that was later removed for reasonable cause.
We’ve all been in situations where, despite our best efforts and with no malice, we’ve gotten something in the mail late or forgot to drop off a payment. The IRS recognizes that such a circumstance is possible for even the best-intentioned taxpayers. That is why programs like the first-time abate exist. If you have submitted a late tax filing or payment and are facing penalties, you should seriously explore this and other abatement programs to see if they could potentially minimize the consequences you now face. To learn more, contact an experienced tax attorney or preparer in your area.