Potential ways to obtain relief from tax penalties

There are many different aspects of running a business in Texas and there are many deadlines that people must meet throughout the year. One of the deadlines is that people must file their taxes on time or file for extensions if they know that they will not have everything ready on time. It is also important that people pay their taxes on time. If people do not meet these deadlines in addition to owing taxes, they could also be charged tax penalties.

These penalties are added automatically, but people may be able to receive some relief from them. There are potential defenses available to people who find themselves in this position.

Reasonable cause

This is typically reserved for circumstances that are out of people’s control such as: Fire or storm damage; not being able to obtain necessary documentation; death, illness or incapacitation of the individuals or immediate family members and other circumstances that made it impossible to meet the tax deadlines.

First time penalty abatement

This is only eligible for people who are first time filers or have not had any penalties for the three years prior; have filed their taxes on time or filed for an extension and the tax has been paid or been scheduled to be paid. If the filer meets these conditions they could request that the penalty be removed. If successful any interest on the penalty would also be removed.

Statutory exceptions

This may be available to people who relied on erroneous advice from the IRS and were charged a penalty as a result. In order to be successful people must demonstrate when they sought the advice, the advice they received from the IRS and the report showing the penalty that was assessed.

There are many situations when and reasons why penalties are assessed to tax payers in Texas. However, in some situations there may be defenses to these penalties based on the circumstances. Experienced attorneys understand these defenses and may be able to guide one through the process.