Question

Your client owes $1,000 of back taxes upon which over $2,000 of accrued interest and $1,000 of penalties is due. Can the IRS abate either the interest or the penalties?

Answer 1

Answer:-

IRS doesn’t abate interest for reasonable cause or as first-time relief. Interest is charged by law and will continue until your account is fully paid. If any of penalties are reduced it will automatically reduce the related interest.

Penalties eligible for penalty relief include:

    Failing to file a tax return
    Failing to pay on time
    Failing to deposit certain taxes as required
    Other penalties as applicable.

The following types of penalty relief are offered by the IRS:

    Reasonable Cause
    Administrative Waiver and First Time Penalty Abatement
    Statutory Exception