Being audited by the IRS can be stressful, and even more so if it results in tax penalties. These penalties can add up quickly and make an already difficult situation even harder to manage. The good news is that there are steps you can take to minimize or even eliminate tax penalties after an audit. A lawyer, like a tax lawyer, can help guide you through this process, providing advice tailored to your specific situation. Here are some ways you can reduce your tax penalties following an audit.
Promptly Address The Audit Results
Having a good tax system is like having a good skincare routine: the more you focus on your routine, the more you can avoid issues before they come up. However, when a problem does come up, it’s important to have a lawyer. One of the most important steps you can take after an audit is to respond quickly. The IRS typically gives taxpayers a specific time frame to respond to audit results and resolve the issues. Ignoring or delaying your response will only make matters worse. The longer you wait, the more likely penalties will accrue, and the IRS may take more aggressive collection actions.
When you receive an audit notice, take it seriously. Review the findings, and if you disagree, you can appeal the decision. The faster you act, the less time penalties will have to accumulate. Working with an attorney or tax professional during this stage can help ensure you address the issue appropriately and avoid further complications.
Request Penalty Abatement
If you have valid reasons for your tax mistakes, you may be able to request penalty abatement from the IRS. Penalty abatement is the process of asking the IRS to remove or reduce penalties due to reasonable cause, rather than willful neglect. For example, if you had a serious illness, a family emergency, or other circumstances that prevented you from meeting your tax obligations, you may qualify for this relief.
The IRS will consider several factors when reviewing a request for penalty abatement, including your history with filing and paying taxes. If you have a good track record of compliance, this could help your case.
Appeal The Audit Decision
If you disagree with the audit results, you have the right to appeal. Filing an appeal may help reduce or eliminate penalties, especially if there is a legitimate reason to dispute the findings. The appeal process involves submitting a formal request to the IRS for a review of your case, and a different IRS agent will review the facts to determine if the penalties were applied correctly.
It’s important to understand that an appeal does not necessarily guarantee the removal of penalties, but it does provide an opportunity for a more thorough review of your case. A tax attorney can help you understand the appeals process, gather supporting documentation, and make a strong case for reducing penalties.
Set Up A Payment Plan
If you owe taxes as a result of an audit but cannot afford to pay in full, you may qualify for a payment plan. Setting up an installment agreement with the IRS allows you to pay off your debt in manageable monthly payments. While penalties and interest will still apply, this option can reduce the immediate financial burden and prevent additional collection actions, such as wage garnishments or liens.
Find Trusted Help
Tax penalties can be a significant burden after an audit, but there are several ways to reduce or eliminate them. Responding quickly, requesting penalty abatement, appealing audit findings, and setting up payment plans are all viable options to minimize the impact. In some cases, you may even qualify for an Offer in Compromise to settle your debt for less. Attorneys like those at Crepeau Mourges can help you explore these options and guide you through the process. By taking the right steps, you can resolve your tax issues, minimize penalties, and move forward with peace of mind.