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certain IRS tax related responsibilities, like failure to file returns or pay taxes timely.
That test is called “reasonable cause.” It asks whether a reasonable person, when
responsibilities. For those penalties not requiring other proof (like lack of wilfulness
or good faith), when the answer is “yes,” the failure is excused and the penalties and
related interest are removed (the term of art is “abated”).
Because of the nature of the test, you can see how much opportunity a taxpayer has
to present matters and facts in a manner they determine is sufficient to compel a
conclusion that reasonable cause exists. Hence, advocacy and persuasiveness is a
major component to every such presentation.
Here are some circumstances commonly present in favorable “reasonable cause”
determinations:
1) serious illness of the taxpayer or someone in the taxpayer’s immediate
family. Consider too, traumatic injury which may be work related, or result from an
automobile collision.
2) death of the taxpayer or someone in the taxpayer’s immediate family.
3) alcoholism or other substance dependency suffered by the taxpayer or
someone in the taxpayer’s immediate family.
4) other serious psychological experience.
5) other major disruption in the taxpayer’s life or the life of a immediate family
member. You needn’t have experienced total destruction like that suffered in the
Katrina Hurricane disaster which all would agree establishes a valid excuse. Rather,
the law recognizes circumstances that most taxpayers eventually confront in their
lives but which fall short of Katrina totality.
6) embezzlement, theft or other nefarious or misleading acts which victimized the
taxpayer.
More specifically, Section 20.1.1.3.1 of the Internal Revenue Manual provides that
the following may be sufficient reasons for a penalty abatement:
1) Ignorance of the Law (20.1.1.3.1.2.1)
2) Mistake (20.1.1.3.1.2.2)
3) Forgetfulness (20.1.1.3.1.2.3)
4) Death, Serious Illness, or Unavoidable Absence (20.1.1.3.1.2.4)
5) Unable to Obtain Records (20.1.1.3.1.2.5)
6) Statutory Exceptions & Administrative Waivers (20.1.1.3.2)
7) Undue Hardship (20.1.1.3.2.3)
8) Advice (20.1.1.3.2.4)
9) Written Advice from the Service (20.1.1.3.2.4.1)
10) Oral Advice from the Service (20.1.1.3.2.4.2)
11) Advice from a Tax Advisor (20.1.1.3.2.4.3)
12) Fire, Casualty, Natural Disaster, or Other Disturbance (20.1.1.3.2.5)
13) Official Disaster Area (20.1.1.3.2.6)
14) Service Error (20.1.1.3.3)
Each of these “defenses” are subject to court determinations, statutory definitions
and administrative guidelines. But the idea here is to give a taxpayer the opportunity
to avoid having to pay what is not fair and proper. Work down on the total liability in
every way you can. This is the way you can overcome the devastating adverse
affect caused by compounding penalties and interest on sums that should not be
applied/assessed against you. For some, it could mean financial survival.
Most states also recognize “reasonable cause” defenses (or something similar) to
avoid the assessment of penalties and related interest. However, getting some of
them to pay attention to (even compelling) presentations is another thing. For
instance, Michigan is observed to seemingly summarily reject defenses no matter
how onerous and heavy handed the assessment may be.
registered trademark. Copying and/or use of the mark without prior written consent is prohibited. Violators will be prosecuted. "Tax Crisis," IRS "Black Hole",
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prosecuted.
IRS "Black Magic," "Taxpayer's Voice Speaks," "Snowballing," "Cycle of Destruction," the theme music, with and without our Taxpayer's Voice lyrics, and the
Armored Man are also trademarks of Richard Craig Krause. Copying and/or use of same without prior written consent is prohibited. Violators will be
prosecuted.
Disclaimer.
Issues of the kind generally identified in this website require expert legal help which would be devoted to the specific facts, circumstances and law that
present. Everyone must accept and understand that the information reflected in this website does not apply to any specific matter or person or legal entity,
any applicable burden of proof, which party has the burden of going forward with proofs or the administrative or jurisdictional issue or concern. The
information provided in this website is superficial and does not attempt to legal issues, and further that it does not identify all the law, conditions or other
requirements that must be met or may apply to any matter or challenge, in whole or in part. We are not responsible for how you may use the information
reflected in this website.
Issues of the kind generally identified in this website require expert legal help which would be devoted to the specific facts, circumstances and law that
present. Everyone must accept and understand that the information reflected in this website does not apply to any specific matter or person or legal entity,
any applicable burden of proof, which party has the burden of going forward with proofs or the administrative or jurisdictional issue or concern. The
information provided in this website is superficial and does not attempt to legal issues, and further that it does not identify all the law, conditions or other
requirements that must be met or may apply to any matter or challenge, in whole or in part. We are not responsible for how you may use the information
reflected in this website.
| IRS REASONABLE CAUSE - EXCUSES 1-800-230-4747 |
Richard Craig Krause & Associates, P.C
| The Taxpayer's Voice |
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