Penalities due to late tax filing
This year I was heavily strapped for cash due to a family emergency. I couldn't file my taxes on time and I had to file for an extension. Usually I receive a very large refund but this time I had to pay a huge amount of money to the government. Since I filed on Oct 15th, I was hit by a penalty of $2000. Anyway, I can reduce the penalty because I had a genuine financial emergency?
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#1 Tax, SDIRAs & Cost Segregation Contributor
- Tax Accountant / Enrolled Agent
- Houston, TX
Actually, no need for a CPA to handle this. Not yet. Call the IRS and ask if the penalty can be waived. If this is your first time of having a penalty, they should be able to waive it while on the phone. You do NOT need to explain your difficulties, just ask to remove the penalty.
If they refuse, then you might need to go a more complicated route: request a penalty relief based on a "reasonable cause" - which your family emergency might qualify for. At this stage, do consider professional help, as the IRS is rather specific about what they accept as a "reasonable cause":
https://www.irs.gov/businesses/small-businesses-self-employed/understanding-penalties-and-interest
https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-reasonable-cause
Keep in mind that the interest cannot be removed, only penalties.