If you`re struggling to pay off your tax debt, you may be interested in an IRS installment agreement. This option allows you to make monthly payments over time, rather than having to pay a lump sum all at once. However, if you fail to make your payments on time, you may be subject to penalties and interest charges.
Fortunately, the IRS offers a penalty abatement program for taxpayers who are unable to pay their tax debt due to circumstances beyond their control. This program, known as the First-Time Abatement (FTA) program, allows eligible taxpayers to have their penalties waived for one tax period.
To be eligible for the FTA program, you must meet several criteria. First, you must be a first-time offender, meaning you have not incurred any penalties in the past three years. Second, you must have filed all required tax returns and paid any taxes owed. Third, you must be current on all filing and payment obligations.
If you meet these criteria, you can request penalty abatement by writing a letter to the IRS. In your letter, you should explain the circumstances that prevented you from making your payments on time. You may also need to provide supporting documentation, such as medical bills or a letter from your employer.
It`s important to note that penalty abatement only applies to penalties, not interest charges. You will still be responsible for paying any interest that has accrued on your tax debt.
If you`re unable to pay your tax debt in full, an IRS installment agreement may be a good option for you. And if you`re eligible for the FTA program, you may be able to have your penalties waived, making your debt more manageable. Just be sure to file all required tax returns and make your payments on time to avoid further penalties and interest charges.