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How To Request Penalty Abatement

Filing a tax return is a burden we all face every April 15th, but about 7 million taxpayers skip the deadline each year. That move is a costly one; those who fail to file their taxes on time can face a penalty of up to 25%. Luckily, Maryland tax attorneys at Rosenberg Martin Greenberg know the ins and outs of penalty abatement and can help you request that the penalties be removed.

The IRS may grant an abatement if the taxpayer files a letter request or Form 843 for each year for which relief is requested. However, the IRS also requires compliance with filing requirements for the next five years or it will reinstate any abated penalties. Our team of dedicated tax lawyers is available to walk you through these and other requirements.

Help with complex tax penalties

There are nearly 150 different penalties that the IRS can tack on to a taxpayer’s bill. On top of the penalties, the taxpayer may owe interest and additional accrued penalties for failing to pay the penalty – these can end up doubling the amount you owe within a few years. The penalties, and types of relief available, are detailed in the Internal Revenue Manual, the IRS’s handbook. But the Manual is complicated and makes the tax code incomprehensible to most people. As a result, the IRS has granted less than 15% of abatement requests in recent years.

You can increase the likelihood of penalty abatement, saving yourself from potentially crippling penalties, by securing the experienced representation of the Baltimore tax lawyers at Rosenberg Martin Greenberg.

Increase your odds of proving reasonable cause

The most commonly used ground for requested abatement is reasonable cause. This might sound like a casual matter but what many people – to their detriment – do not realize is that abatement applications meet greater success when they refer to a specific section of the IRS Manual. In fact, there are a handful of reasonable causes that are specifically recognized in the Manual, including:

  • Undue hardship
  • Bad advice from a tax practitioner
  • Mistake
  • Inability to obtain records
  • Fire, casualty, natural disaster
  • Death, serious illness, or unavoidable absence
  • Ignorance of the law

The taxpayer must prove to the IRS that reasonable cause exists given the taxpayer’s circumstances. While a live person may review your penalty abatement request, determinations to grant an abatement based on reasonable cause are made based upon a computer model. Even if none of the reasonable cause justifications apply to your situation, there may be other grounds for penalty abatement for unfiled tax returns. In either case, contact the tax lawyers of Rosenberg Martin Greenberg to increase your chances winning an abatement.

Penalty abatement in Maryland

To apply for a penalty abatement on taxes owed to the State of Maryland, similar rules apply. To request an abatement, the taxpayer must be current with his tax filings. The state’s exorbitant interest rate on deficient taxes –13%, the highest in the country – is a good reason to file your taxes on time. But if interest and penalties have been added to your tax debt, it may be abated by either the tax authority or courts.

Penalty abatement in Washington, D.C.

Moreover, the Office of Tax and Revenue has the authority to waive or remove penalties on taxes owed to the District.   A waiver request should be made in writing to OTR, explain all circumstances relevant to reasonable cause and include all documents that support your request (for example, an insurance report supporting your claim that a fire destroyed your records).

Our attorneys focus on Federal, Maryland, and Washington, D.C. tax representation and are here to help you too. Our seasoned tax attorneys have experience fighting the penalties with the IRS, the Maryland Comptroller, the Maryland Tax Court, and the DC Office of Tax and Revenue If you face a tax penalty in Maryland or in the Washington D.C. area, call 410-727-6600 to set up a consultation.

Rosenberg Martin Greenberg

25 South Charles Street, 21st Floor MD 21201
Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions