IRS Penalty FAQ

There are three penalties that the IRS assesses most often. Failure to file, failure to pay, and understatement penalties.

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.

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.

Yes. there are a few different ways to request that an IRS penalty be removed.

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.

Yes. In certain audit and CP2000 situations, it will make sense to request that the IRS refrain from assessing the IRS penalty.

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.

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.

There are certain types of returns and items in returns that are considered to be more likely to cause an 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.

In-person audits are typically more complex and serious. There are some items you should be aware of.

Yes. In fact, it's probably a preferred method if deadlines are near and you should follow up to ensure the fax was received.

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.

An audit result can be appealed internally and to the U.S. tax court.