Anyone who has ever encountered a tax problem with the IRS or a State tax agency knows the magnitude of the penalties levied by the government for non-compliance. Due to the rapid accrual of high tax penalties and interest, a manageable tax bill can quickly escalate to unmanageable levels. Penalties and interest can easily double a tax bill in the first few years. Older tax debts are mostly of penalties and interest. Each year, the IRS assesses and collects billions of dollars in tax penalties. Each type of penalty aims to punish specific non-compliance. Delinquency, negligence, and failure to make timely payments are the most common IRS penalties effecting average individual and small business taxpayers.
The IRS recognizes that some delinquencies may be excusable, or are assessed in error. In some cases, the penalties may be abated or reduced. However, it is necessary to show reasonable cause for not following the law.
Related Topic: Payroll Tax Problems