We may be able to eliminate or reduce some penalties if you acted in good faith and we can show that there are reasonable reasons why you were unable to meet your tax obligations. By law, we cannot eliminate or reduce interest unless the penalty is eliminated or reduced. You may be eligible for certain penalties to be eliminated or reduced if you acted with reasonable cause and in good faith. We will automatically reduce or eliminate the corresponding interest if any of your penalties are reduced or eliminated.
For more information on the interest we charge on penalties, see Interest. The IRS uses sanctions to encourage us to follow the rules and keep them in compliance, and it uses them a lot. Every year, the IRS evaluates tens of millions of penalties totaling billions of dollars. However, the IRS also offers several options to eliminate or reduce penalties for people who qualify.
You must have documented erroneous advice from the IRS that you have reasonably relied on, and the IRS does not usually put tax advice in writing. The amount of the IRS tax penalty can range from less than 1% to 100% of the underlying IRS tax liability. The tax lawyer can find the right method to reduce the penalty and increase the chances that the IRS will act in a timely and favorable manner on the request.
