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Video instructions and help with filling out and completing Are Form 843 Download

Instructions and Help about Are Form 843 Download

Hello and welcome to today's edition of Rubin on tax. Today, we will be discussing the first-time abatement program and its relevance to penalties for failure to file or pay taxes. Many people may be unfamiliar with this program, but it is important to understand how it can affect taxpayers. If you are late in filing your tax return, the IRS will impose a 5% penalty per month on the tax amount. Additionally, if you are late in paying your taxes, there is an additional penalty of 1/2 of 1% per month. Both of these penalties can accumulate up to a maximum of 25%. However, since 2001, there has been a program called the first-time abatement program that allows taxpayers who have been compliant with their taxes for the prior three-year period to avoid these penalties if it is their first time incurring them for filing late or paying late. The penalties for failure to file or pay taxes can be significant. The Inspector General for the Treasury Department found that the average penalty imposed in these circumstances was about $60,000 for failure to file and $21,000 for failure to pay. Unfortunately, many taxpayers are not aware of the first-time abatement program. The Inspector General's review of IRS records showed that approximately 1.45 million taxpayers could have used this program but instead paid penalties without knowing about this option. As a result, the IRS collected about $181 million in taxes that it should not have. The Inspector General pointed out this problem, and the IRS has pledged to address it by publicizing the program and taking necessary steps to rectify the issue. There is also a secondary issue to consider. If taxpayers are aware of the first-time abatement program and use it, they may miss out on an opportunity to abate their taxes due to...