Considering the recent financial downturn, many Americans are finding themselves in trouble with the IRS. Often these troubles relate to penalties and interest charges resulting from late tax filings, non-payments and other issues.

Failure to file penalties are one of the most severe penalties that the IRS has in its arsenal. Failure to file penalties are 5% per month (or part of month) up to a maximum of 25%. If you dont have the funds to pay your tax bill, make sure that you at least file your taxes and you can work out a payment arrangement with the IRS later. That way you can at least avoid failure to file penalties.

Failure to pay penalties are less onerous. They are 0.5% of the initial tax bill. Again, these are capped at 25%. These penalties are certainly less than failure to file penalties, but they still can add up over time.

Make sure that you carefully review any IRS penalties that have been assessed. In some situations you find that the IRS has assessed a late filing penalty when in fact you had filed timely or at least timely filed an extension.

Abatement of IRS penalties can occur, but only if the taxpayer can show reasonable cause. Reasonable cause for late filing includes: (1) the death or serious illness of the taxpayer or an immediate family member of the taxpayer; (2) the unavoidable absence of the taxpayer on the filing date; or (3) the destruction of the taxpayers business or personal residence.

Interest charges are very difficult to have abated. The point is that you have had the IRS money and they deserve to be paid interest since the date. Accordingly, getting the interest charges removes can be a challenge.

If you are facing IRS penalties and interest rest assured that you are not alone. Depending on the situation, you may be able to have the abated. Just make sure that you understand all the rights that have been afforded to you under the law.

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