When it comes to having adult responsibilities, no one is usually jumping with excitement to do their taxes. It can be a long, complicated and tedious process so no wonder it’s one of those chores we put on the back burner. However, that kind of procrastination is also what gets us in trouble. While we are so focused on everything else, the deadline to file passes and you don’t realize it until it’s too late. That one-time mistake can cost you with fines and penalties from the IRS, putting you out of hundreds or even thousands of dollars. Fortunately, in a situation like this you do have an option that many taxpayers are unaware about called a First Time Abatement request or (FTA).
First-Time Abatement (FTA)
A first time abatement happens when a “first-time non compliant taxpayer can request abatement of certain penalties for a single tax period.” For individual taxpayers, the most common request for an FTA is because of a failure to file or a failure to pay on taxes owed. For a business, it can be for a failure to file, failure to pay, or the failure to deposit payroll taxes. There are several stipulations to qualify:
- You must have not accrued any penalties of a “significant” amount in the past three years. Keep in mind that in previous cases, the IRS has considered $1 to be a significant amount and does not specify a given amount on their website
- You may only qualify for penalties given in a single tax period
- You must have complied with all filing requirements. If you owe taxes and are in a payment arrangement, all payments must be current as well.
How do I request an FTA?
For a direct response, taxpayers can call the IRS directly requesting an FTA. For written communication, it is important to include any documents supporting your case. The decision to grant an FTA is through an automated tool used by the IRS called a Reasonable Cause Assistant. It has been noted that the tool can be highly inaccurate in determining eligibility. Therefore, if your request is denied and you strongly believe you qualify, then you should appeal your case. A further detailed review of the process can be viewed here.
If you are unsure that you qualify for an FTA or are nervous about negotiating with the IRS on your own, it is time to give Civic Tax Relief a call. We will ensure that you approach your case with the confidence you need to get the outcome you want. Contact us today!