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April

IRS Penalties and Interest

April 15th is tax day and, as most taxpayers know, it is also the deadline for paying any tax owed to the IRS. If you do not pay your taxes when filing your individual income tax return, and if money is owed, you will be sent a Demand Letter by the IRS. The Demand Letter is your first notice and is an assessment by the IRS of your tax debt. At this time, penalties and interest on your outstanding debt will begin to accrue until the date of payment. Reminder notices will continue to be sent including the amount due along with penalties and interest. Usually, five notices, or reminders, will be sent out before the IRS begins taking measures to levy or garnish assets.

According to the IRS, penalties and interest rates, if not otherwise established in an alternative payment plan, are figured as follows:

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That means you could be paying up to 5% every month on top of your tax debt. Interest will continue to climb overtime and you could be responsible for up to 25% until the tax debt is settled. Rates like these exceed interest on most major credit cards and personal loans, and can be damaging to your credit, assets and reputation.

Penalty and Interest Abatement

An effective release of penalties and associated interest can have a tremendous impact on the amount of tax debt finally owed. Sometimes the amount owed can triple in size JUST from these additional penalties. By leveraging your rights and hiring the best representation available, you stack the odds for a favorable penalty abatement in your favor.

The better your representative understands your circumstances, the better they can use these conditions to argue for abatement and reduce the amount owed. Even in instances where clients had to pay, our associate tax attorneys have been able to negotiate a reasonable settlement and mediate the overall liability.