IRS Penalty FAQ
What Are the Most Common IRS Penalties?
There are three penalties that the IRS assesses most often. Failure to file, failure to pay, and understatement penalties.
How Will I Find out About an IRS Penalty?
When the IRS assesses a penalty, it sends a notice. If you don't have the notice, you can ask the IRS for a history of the accounting year and it will show which penalties have been assessed.
What if I Choose Not to Pay the IRS Penalty?
If the IRS assesses a penalty, that penalty becomes part of the underlying debt and the IRS will take collection action on it if ignored.
Can I ask the IRS to Forgive or Abate the Penalty?
Yes. there are a few different ways to request that an IRS penalty be removed.
What Is IRS First Time Penalty Abatement?
In a limited circumstance, the IRS will abate a penalty for failure to file, failure to deposit, or failure to pay just because you asked.
Can I Ask the IRS Not to Assess a Penalty Before It Does?
Yes. In certain audit and CP2000 situations, it will make sense to request that the IRS refrain from assessing the IRS penalty.
Can IRS Appeals Request a Statute of Limitation Extension?
Yes. The IRS only has a specific period to finalize an audit. If you appeal the decision, appeals may ask you to extend that date.
How Likely Is It that I'll Be Audited?
Overall audit odds have been low in recent years. But there are certain entities and items on tax returns that increase the odds of audit.
What Are Considered Some Audit "Red Flags"?
There are certain types of returns and items in returns that are considered to be more likely to cause an audit.
Can Someone "Turn Me In" for IRS Audit?
Yes. The IRS accepts “ whistleblower” information. The whistleblower will submit a form to the IRS called in the information referral form. The IRS encourages it.
If I've Been Assigned a Field Auditor, What Should I Be Aware Of?
In-person audits are typically more complex and serious. There are some items you should be aware of.
Can I Take Care of An IRS Mail Audit by Faxing Information?
Yes. In fact, it's probably a preferred method if deadlines are near and you should follow up to ensure the fax was received.
Can I File an IRS Tax Court Petition on My Own?
Many taxpayers file a petition with the U.S. tax court post-audit on their own. the tax court webpage provides some detailed information about the process.
How Do I Appeal a Bad Audit Result?
An audit result can be appealed internally and to the U.S. tax court.