It may come as no surprise that during its fiscal year 2022, the IRS assessed a whopping $73.6 billion in civil penalties against taxpayers. But what may surprise you is during that same time period, the IRS also removed, i.e. abated, $50.9 billion in civil penalties that had been previously-assessed against taxpayers.
Given how rigid and technical the IRS can be in applying its rules, coupled with how aggressive it can be in collecting its money, an annual abatement rate of more than two-thirds of all penalties assessed almost seems excessively gratuitous on the part of the IRS. However, the reason for the high abatement rate is not at all attributable to the IRS’s generosity; instead, it is attributable solely to the IRS’s official policy that the purpose of assessing civil penalties is to “enhance voluntary compliance.” See IRS Policy Statement 20-1.
Stated differently, the IRS does not assess civil penalties for the purpose of generating revenue. This explains why the abatement rate is so high.
So how exactly does one obtain abatement of a civil penalty assessed by the IRS? There are four main avenues to civil penalty relief: (1) statutory/regulatory exceptions; (2) administrative waivers; (3) correction of IRS errors; and (4) reasonable cause. As with many things under the law, which avenue or avenues may be available to argue for abatement depends on the facts and circumstances of the penalty that was assessed.
So if you have been assessed a civil penalty by the IRS, we recommend contacting a qualified tax professional with experience working with the IRS to achieve positive outcomes for their clients, such as Eyet Law. We can efficiently analyze and assess the unique facts and circumstances surrounding your case to determine whether a penalty abatement request is right for you, and the various options for resolution.
