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Penalty Abatements
Avoiding Tax Penalties When you don't pay your back taxes, tax penalties and interest accumulate quickly and increase the amount you owe. The IRS permits the removal or abatement of tax penalties and interest or a refund if there were certain circumstances contributing to the problem, or you had a good reason for falling behind. To establish you experienced an extenuating circumstance, you or your tax professional must show the IRS that you had "reasonable cause" for not paying taxes.
What qualifies as reasonable cause? The answer depends on your individual circumstances and the IRS procedures on determining who qualifies. The below list include the main reasons under which you can qualify for tax penalty abatement.
Death or serious illness of you or a close family member. Fire, flood, windstorm, embezzlement, theft or other casualty beyond your control. Bad accounting advice. Inability to make deposits or payments because of civil disturbances. Lack of funds under the Federal Tax Deposit System when you can show the lack of funds occurred despite the exercise of ordinary business care and prudence.
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Death or serious illness of you or a close family member.