Penalty Abatement

Recently I had a client that assumed we would be able to lower their liability for them. This is a very broad statement and one that is possible, but needs some major substantiation. According to the IRS, the only reasons they would abate penalties on liability would be for the following reasons:

* Incarceration
* Lost/Misplaced Documents
* Severe Medical Condition
* Erroneous Advice gievn by an IRS agent

[http://www.irs.gov/pub/irs-pdf/i843.pdf]


All this would prevent a taxpayer from being able to physically file their returns.

The IRS will never abate interest, but would possibly abate penalties provided they meet the above qualifications.

For example, I had a client that said he was the primary care giver while going through a difficult
divorce. He asked if he qualify for penalty abatement, to which I said unfortunately not, because he physically able to file his returns to consequently prevent further penalties. If he were the one with a medical condition, then the outcome would be different and would be more advantageous to file for penalty abatement.