First Time Penalty Abatement Relief Often Overlooked

The Treasury Inspector General for Tax Administration (TIGTA) recently audited the IRS to determine whether penalty abatement for the failure to file a tax return, or failure to pay a tax liability was consistently and accurately applied to taxpayers who qualified. Although many taxpayers and tax professionals are aware of the reasonable cause exception to penalties, many are not aware of the First-Time Abate (FTA) penalty available to taxpayers who have been in compliance for the most recent three years and who have not previously requested penalty relief. Tax advisors should carefully weigh whether a taxpayer also qualifies for a reasonable cause exception and consider the potentially negative impact of obtaining an FTA waiver instead. To view the full TIGTA report, click here.

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