If you've recently received a penalty notice from the IRS for late filing, late payment, or missed employment tax deposits, don’t rush to pay—you may qualify for penalty relief. The IRS offers several options to reduce or eliminate these penalties, potentially saving you thousands. McFadden Accounting can guide you through the process.

Common IRS Penalties and Their Impact

The IRS imposes penalties for various infractions, including:

• Late Filing Penalty – Up to 5% of unpaid tax per month, maxing out at 25% for individuals and C corporations. Partnerships and S corporations can face penalties of $245 per partner/shareholder per month.
• Late Payment Penalty – Typically 0.5% of unpaid tax per month, up to 25%.
• Failure to Deposit Employment Taxes – Ranges from 2% to 10% based on the delay.

How to Qualify for Penalty Relief

You may be able to remove or reduce IRS penalties using the following strategies:

1. First-Time Abatement – If this is your first penalty (or first in three years), you may qualify for an automatic penalty waiver. This applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties.
2. Partnership Relief – Small partnerships (10 or fewer partners) can seek penalty relief if all partners filed their tax items on time under Revenue Procedure 84-35.
3. Reasonable Cause Relief – If extenuating circumstances—such as illness, natural disasters, or life events—prevented you from meeting tax deadlines, you can request relief based on reasonable cause.

How to Request a Penalty Abatement

• Phone Call: Many penalties can be removed with a simple phone call using the right approach and terminology.
• IRS Form 843: If you’ve already paid the penalty, file IRS Form 843 to request a refund within three years of filing the return or two years of penalty payment.

Get Expert Help from McFadden Accounting

Navigating IRS penalties can be stressful, but McFadden Accounting is here to help you avoid unnecessary costs and maximize your tax savings.

Don’t let this opportunity slip away—take action now and claim what your business is entitled to!