New IRS Penalty Abatement Program
Hello from Amsterdam!
Our family flew to Amsterdam right after my bike race was completed on Sunday. We took our oldest son with us and left the girls with grandparents. My son has been asking for a “just me” trip since the girls got one in previous years, so we decided to take him. He will be 10 years old this year and I think he will remember this one!
I have never been to Amsterdam and EVERYONE bikes here. Once my legs heal up, I might rent a bike and give it a go.
The IRS recently rolled out an important update to the first-time penalty abatement program.
Here is the link to the update: Administrative penalty relief | Internal Revenue Service
History: In the past, the IRS has typically allowed a first-time abatement (“FTA”) on certain penalties. This is the one silver bullet we can use to remove a penalty, provided you have a clean compliance record.
To request FTA, it usually involves a phone call to the IRS to explain the situation and beg for forgiveness.
We advise clients to be very thoughtful on how/when to use the silver bullet. For example, don’t waste this on a $50 penalty.
Last week, the IRS announced a new Automatic Exemption from Penalty (AEP) program that is expected to begin this summer. Under this new approach, eligible taxpayers with a strong history of timely filing and payment may automatically receive relief from certain common penalties, without having to submit a separate request.
So instead of having to call the IRS, the IRS will automatically remove the penalty if you meet the eligible requirements. This, in theory, will save a lot of phone call times and will free up time for IRS personnel to tackle other matters.
Frankly, I am not a fan of this new rule. The AEP puts the power in the IRS’s hands to determine which penalty to abate. So if you have a $50 penalty and have a clean history, it's very likely that your $50 penalty will be abated.
This demonstrates yet another shift in the IRS to automate their systems.
As always, reach out with any questions or comments. I will be back in the office on July 27th.
Cheers,
Moses
M Squared Tax PLLC
P: 206-992-0405
A: P.O. Box 2029, Bend Oregon 97709