If you owe the IRS a large tax bill—either as a result of understating your income, claiming inappropriate deductions, or simply not paying any taxes at all—the odds are good that you have been assessed a substantial penalty (as well as accumulated interest) in addition to the amount you owe. In certain cases, the IRS may be willing to abate this penalty and interest, provided that you can pay your back taxes in full. Negotiating a penalty abatement is a complicated matter, though, and one that should only be handled by an experienced Oklahoma tax lawyer.
A Penalty Abatement Will Reduce, But Not Eliminate, Your Tax Bill
The key thing to realize about a penalty abatement is that it will only shave a certain amount off your tax bill—the penalty that the IRS has levied for underreporting your income or failing to pay back taxes. If, say, you owe $100,000 in back taxes that have accumulated over the past five or six years, the IRS may choose to append a $25,000 penalty and $5,000 of interest, bringing your total tax bill to $130,000. The best you can expect from a penalty abatement is to lessen (or eliminate) that $30,000 surcharge. You will still have to pay the $100,000, either in a lump sum or an installment plan.
The IRS is most likely to grant you a penalty abatement if you can prove that paying the full bill would be an extreme hardship. Some good reasons for a penalty abatement include:
- Loss of your job
- A recent divorce, or the death of your spouse
- Serious illness
As a general rule, the IRS will not be impressed by the argument that paying your tax bill in full, including penalties and interest, will put you in straitened financial circumstances, forcing you to sell your house or your car. In the eyes of the government, the only reason you were able to afford that house and car in the first place is because you weren't paying your taxes!
Only an experienced tax attorney in Oklahoma can make a compelling case for a tax abatement; it's not a good idea to tackle this process by yourself.
Do You Want Your Tax Penalty Abated? You Need the Help of an Experienced Lawyer
At the law firm of Travis W. Watkins, PC, we specialize in obtaining tax abatements for residents of Tulsa, Norman, and Oklahoma City. Our tax attorneys in Norman have decades of experience negotiating with the IRS, and will aggressively represent your interests to obtain the least possible tax burden. Call today at 800-721-7054 for a free consultation!