Removing Penalties and Interest Charges – Can you do that?


One of the IRS’s methods of punishing wayward taxpayers is to add penalties and interest to back taxes, failure to file cases or returns that have been filed late, and even if you fail to file the right tax return. Both penalties and interest charges are added automatically. Given these issues, many people have IRS Problems. If this is the case for you, investigating the possibility of removing both penalties and interest charges on the taxes you owe is worthwhile.


There are five types of penalties the IRS uses: Accuracy, Fraud, Failure to File, Failure to Pay, and combinations of these penalties.

One way to remove penalties from your tax bill is to show reasonable cause. Reasonable cause can be identified in many ways. Common events the IRS will consider are:

• Forgetfulness
• Ignorance of the law
• Incorrect advice from the IRS
• Incorrect advice from your tax professional
• A mistake was made
• The inability to obtain records
• Serious illness or death
• Natural disasters
• Acts of God

As long as your reason shows that you did not intentionally cheat, deceive, or mislead the IRS, it can qualify as reasonable cause.

Penalty Abatement

You can request a penalty abatement in writing as soon as you receive your tax bill. IRS Form 843, Claim for Refund and Request for Abatement, is also available. Return the reasonable cause documentation along with a copy of your IRS Notice showing the penalty assessed. If you owe taxes and can pay them at this time, include your payment stating that this amount should go toward your tax portion of the bill. Do not forget to make copies of all your correspondence to the IRS.

Be patient as it may take more than one mailing to receive a response to your request.
It is also important to note that if your request for penalty abatement is denied, you cannot use the same grounds to make another request.


Removing interest charges from your tax bill is not easy, and most times, it is not an option. If the reason interest has been charged is because of an IRS error you will have more success.

Other circumstances that may allow interest to be removed include:

• If there were delays by the IRS.
• If a tax or penalty is abated.
• They may be decreased if you obtain an Offer in Compromise.
• Filing for bankruptcy. This should be used as a last resort and it should be noted that you might still owe taxes after the bankruptcy term.

Contact our office for more information regarding IRS interest and penalties or any other IRS Problems you might be experiencing. Our knowledgeable staff will be able to help you resolve your IRS Problems so you and your family will be worry free.

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Comments on Removing Penalties and Interest Charges – Can you do that?

February 18, 2008

Kathy @ 12:47 pm #

My husband had taxes prepared by an accountant in 2003–unfortunately he never filed them. Now–we owe triple the amounts on both federal and state. We were married at the time but filed separately. I believe we have a case as to why the returns were not filed. We have been trying to work with the IRS but are getting nowhere. I did sent a letter asking for abatement of penalties and interest (I did not fill out the form mentioned IRS form 843). All previous years prior to and after 2003 were filed appropriately for him. Any thoughts?

March 9, 2010

Lisa @ 3:57 pm #

I've been researching online and something is still not clear to me…..suppose someone submits tax returns in fall of 2000. The tax might be assessed sometime in 2002. Penalties and interest will continue to accrue over the 10-year statute period. Do ALL of the penalties and interest disappear when the statute of the initial tax is expired, or do the 10 years of penalties and interest fall off at the end of each year over 10 years? Thank you

Lisa @ 5:45 pm #

Thank you – I appreciate the prompt and thorough response.

I have another question: in Nov of 1998 my wages were garnished by the IRS and I had to call them. In the course of collection my income and expense info, the agent asked when my car would be paid off and I told her. She said that when it is paid off I have to send the amount of my car payment to them. Would I need to make payments only until the statute expires, or would my sending them payment open another 10-year can of worms?

Thanks again.

March 12, 2010
May 25, 2010

tracy @ 10:47 pm #

Hi, I filed my 2007 taxes on time in 2008 with an amount due (which I would need to make payments on) by regular mail. I never heard from them and did not even think about it with normal life taking over, my fault. I filed again in 2008, again never heard from them and filed by regular mail. I should have called them but didn\'t. I know it is no excuse but I am a 3/4 time student and full time military with the normal family obligations. I filed this year sending it return receipt and certified and they received it. Now, I am obviously being charged penalties and interest. Do I have a chance for abatement? Thank you for any help!

June 3, 2010
December 16, 2010

tim @ 9:38 am #

hi Mr. Darrin
My wife filed in 2008 with Turbo tax and entered the final amount incorrectly
and now we both are on unemployment can this help with removing penalties
from the IRS using the 843 form

February 8, 2011