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How can I eliminate interest and penalties on past due taxes with the IRS?
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If you owe interest, you'll be out of luck, it can't generally be waived. However, there is a process where you can request that the IRS waive the penalties if you have a legitimate reason for why you didn't pay your taxes on time.
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For interest: you must demonstrate that you experienced an unreasonable delay that was the IRS's fault. Except for a few cases where the IRS actually lost our papers, I've not seen this happen much. (I guess the IRS thinks most delays are reasonable.). . For penalties: it is basically a reasonable cause standard. If you were unable to pay your taxes in full at the time they were due, even though you were using reasonable care, then the IRS will give relief on penalties, despite what most people think. If something bad was happening (you were seriously ill, your records were damaged in a flood or fire, etc.) when the taxes were due, you should have a pretty good shot. If it was the first time you were required to pay a tax and file a new type of return, it may be a slam-dunk. Even just financial hardship can be a good enough reason, though it's definitely not the strongest one around.. . Lots of clients want to get their penalties and interest reduced BEFORE they make a deal with the IRS. That's not going to happen. You need to make sure you're paying your current taxes and filing your current returns when they come due (never mind past stuff for right now) before you can get any favors. You should also either enter a repayment agreement before requesting P/I relief or discuss the possibility with your IRS contact at the same time you're making a deal with them. (Sometimes, the IRS will offer P/I relief as an incentive to make a repayment agreement.). . Requests can usually be made verbally, if you are dealing with a Revenue Officer (local IRS person assigned to hassle you into repaying). Otherwise, you'll probably be expected to submit an IRS Form 843 (available at www.irs.gov). Letters work, too, but they have to be so specific that it's tough for most people to do correctly. If you are claiming a reasonable cause to justify a penalty abatement, be prepared to provide documentation to prove your story.
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Get an attorney, without one, you will have to pay penalties and other fees for taxes owed. So, you can either pay an attorney, or the IRS. Sometimes, if the attorney is good, you'll actually pay less!
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You could theaten to take them to court and settle for less. You would be suing for undo hardship. If the intrest and penalties are higher than a bank loan, you could get a bank loan and pay off the IRS that way. It would be like refinancing property.
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It's hard to negotiate with the IRS. Best to just get a home equity loan and pay them off so you don't hear from them again. Maybe if they hear that you will be paying them back lump sum, they'll give you a break. I did that with a student loan once when I forgot to change my address and was late.
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I don't think you can remove interest and/or penalties from IRS... you will have to pay any pennie you owe to them...
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