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February 21, 2024
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Finance

Interest and Penalty Waivers from the IRS

What Taxpayers Must Do When They Discover a Penalty Following Tax Filing

U.S. tax returns are scrutinized thoroughly to prevent citizens from receiving refunds that exceed their legal entitlements. The annual cost of tax evasion to the United States government exceeds $458 billion.

Governments want to lose as little tax revenue as possible, therefore examining tax returns properly is crucial for preventing tax evasion.

If the IRS examines a tax return and finds errors, it will issue a notice of deficiencies for IRS first time penalty abatement. The Internal Revenue Service (IRS) has the authority to levy a fine on a taxpayer if they discover an error. To help everyone know what to do if they are hit with a tax penalty, we’ve included some information on such fines below.

Incorrect tax filing may result in a wide variety of fines.

After the fact, fines are often imposed on taxpayers. Many people incur fines because they either don’t file their taxes promptly, don’t pay the taxes they owe promptly, or report a far lower income than they earn.

Generally, tax returns must be submitted to the IRS by April 15 of each year. Someone should ask for an extension if they have inadequate paperwork or particularly complex filing information and will need more time to complete their tax return.

The extra time afforded by the extension will allow them to compile the necessary materials and ensure that their return is thoroughly and accurately submitted before an IRS audit. To be considered by the IRS, the extension must be submitted before the due date for filing taxes.

Individuals may be penalized in different amounts

Individual taxpayers may be subject to different fine amounts depending on the severity of the infraction. The total amount of back taxes, the length of time since the taxes were originally due, and the size of the shortfall all go into the final assessment. The penalty amount and the basis for the penalty will be detailed on the IRS penalty form, allowing the taxpayer to make an informed decision about whether or not to contest the penalty.

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