Tax Penalties

When you don't file a U.S. tax return, or file it incorrectly, you could face tax penalties from the Internal Revenue Service (IRS). The IRS is responsible for collecting taxes and ensuring that U.S. taxpayers adhere to tax laws. If the agency discovers that you've violated the law, either willfully or unintentionally, the consequences could be hefty fines, property liens and levies, or jail time.

If the IRS has warned you that a penalty is coming soon, you should act quickly to resolve the situation. An experienced California tax attorney can help you decide what your best course of action is, how you might be able to seek relief, and what your rights are.

IRS Civil Tax Penalties

The IRS can charge you with violating tax law and issue a penalty as a result. The penalty for civil offenses is often a fine. Depending on the nature of your violation, the amount of your penalty could be substantial. The most common penalties are failure to file, late payment, and underpayment.

Examples of IRS Civil Tax Penalties:

  • Failure to file penalty
  • Late payment penalty
  • Accuracy penalty
  • Audit penalties
  • Estimated tax penalty
  • Failure to deposit penalty
  • Failure to file W2 and W3 forms
  • Preparer Penalty
  • Trust Fund Recovery Penalty
  • Frivolous Penalty

When you receive a notice from the IRS about a tax penalty, it will almost always arrive by mail. The letter will explain which penalty the IRS is issuing against you and which steps you can take to address it. Your options are usually to comply, appeal, and ignoring is not an option. For help understanding a penalty notice from the IRS, talk to an experienced tax attorney.

IRS Criminal Tax Penalties

The IRS mostly issues civil tax penalties, but the agency might open a criminal investigation in some cases. Most criminal cases are forms of tax fraud or tax evasion.

Examples of IRS Criminal Tax Violations

  • Filing a fraudulent return
  • Tax evasion
  • Failing to file a tax return (usually civil, but IRS can handle as criminal)
  • Willfully failing to disclose offshore bank accounts
  • Unauthorized disclosure of information
  • Fraudulent withholding exemption certificate

Penalties for criminal tax violations can come with steep fines and prison time. If you're guilty of criminal tax evasion, for example, the IRS can fine you up to $100,000 and send you to prison for five years.

Tax Penalty Abatement

An abatement is relief from a tax penalty, removing the IRS's penalty against you. Some penalties, such as failure to file and failure to pay, are eligible for abatement. Others, such as the estimated tax penalty, cannot be abated. There are a few penalty abatements such as first-time penalty abatement and reasonable cause abatement.

Help with Tax Penalties in California

If the IRS is assessing a penalty against you and you're not sure what to do, a qualified tax professional can advise you. Contact a California Tax Attorney today for a consultation and to see if an abatement or other form of tax relief is available for your situation.

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