What About the Waiver of the Penalty?

You can be eligible for a reduction in your tax penalty payments if you satisfy certain requirements. If you are found to be eligible, the Internal Revenue Service (IRS) will cancel any penalties that have been added to your tax bill. You will continue to be responsible for paying the taxes that you are currently behind on. Learn more about the author and the system.

Causes of penalty exemption

If a taxpayer wants to avoid having to pay further penalties, they need to be able to demonstrate that they made every effort possible to adhere to the terms of their payment plan. For instance, a taxpayer may be eligible for relief if they are unable to pay their taxes as a result of a natural disaster or a problem with their residence that prevents them from doing so. To restate, the following are the conditions under which a taxpayer might be exempt from paying the penalty:

  • Filed all of the returns.
  • Paid or made arrangements to pay any taxes that were due.
  • During the three years prior to the year in which a penalty was imposed, the taxpayer was not required to submit a return and did not incur any penalties as a result of failing to do so.
  • You are exempt from paying fines for the three previous tax years prior to the year in which you were assessed a penalty.
  • You were excused from having to submit taxes for the three years leading up to the year in which you were assessed a penalty.
  • You have submitted all of the required forms, or you have submitted an extension to file late.
  • You have either paid any taxes that are owed or made arrangements to pay them.
  • You can potentially qualify for relief if the Internal Revenue Service gave you inaccurate advice.