How to Settle IRS Penalties for Good (Abatement Guide)
Introduction: IRS Penalties Add Up Fast — But You May Not Have to Pay Them
Late filing. Late payment. Estimated tax underpayment. Accuracy errors.
Individually, these might not seem major — but combined, IRS penalties can double your debt.
The good news: the IRS allows penalty relief — and many taxpayers qualify without even knowing it.
This guide walks you through the 3 main IRS penalty relief programs, what to expect, and how Orange County residents can get penalties removed permanently.
✅ The Most Common IRS Penalties
| Penalty Type | What It's For | Rate |
|---|---|---|
| Late Filing | Filed after deadline | 5% per month, up to 25% |
| Late Payment | Paid after due date | 0.5% per month |
| Estimated Tax | Didn’t pay quarterly | Varies |
| Accuracy-Related | Math or deduction error | 20% of underpaid tax |
| Fraud Penalty | Intentional underreporting | Up to 75% of tax owed |
✅ How to Get IRS Penalties Removed or Reduced
1. First-Time Penalty Abatement (FTA)
Fastest and easiest if you:
- Filed all past returns
- Haven’t had a penalty in the last 3 years
- Are otherwise in compliance
✅ Best for late filing or late payment
✅ Requestable by phone or mail
✅ A CPA can often get this approved in minutes
2. Reasonable Cause Abatement
This requires proof that something outside your control prevented timely filing or payment.
Examples:
- Medical emergency
- Natural disaster
- Death in the family
- Financial hardship
- Incorrect IRS advice
✅ Requires documentation
✅ Can be granted even if you’ve had penalties before
✅ Can apply to multiple years
3. Statutory and Technical Relief
This includes:
- IRS processing errors
- Duplicate assessments
- Wrongfully assigned penalties
- Administrative issues you can prove
✅ These are less common but very real — and a CPA can often spot them in your IRS transcript.
✅ What Penalty Relief Does Not Do
- It doesn’t erase the actual tax owed
- It doesn’t stop interest from continuing to accrue
- It won’t be granted if you’ve ignored IRS notices or skipped required filings
🧠 Can You Get Penalty Relief with an Offer in Compromise?
Yes — when you submit an Offer in Compromise (OIC), the penalties and interest are usually included in the total debt being settled.
👉 How Much Will the IRS Usually Settle For?
📄 What You’ll Need to Apply
- IRS account transcript
- The IRS notice with penalty information (e.g., CP14, CP22A)
- Documentation for hardship (if requesting reasonable cause)
- Form 843 (Request for Abatement), if mailing
💡 Pro tip: Most FTA requests can be done over the phone. Reasonable cause requires stronger evidence.
🧭 How Boulanger CPA Helps Orange County Taxpayers
We help individuals and business owners in Irvine, Santa Ana, Anaheim, and Fullerton:
- Review penalty notices and transcripts
- Request first-time abatement by phone or mail
- Draft and submit reasonable cause letters
- Identify technical abatement opportunities
- Package Offers in Compromise to include penalties
📞 Call
657-218-5700
🌐
www.orangecounty.cpa
Frequently Asked Questions
Can I get all penalties removed?
Possibly. First-time abatement is easy if you qualify. Reasonable cause requires documentation.
Will the IRS remove interest too?
Only the interest charged on penalties — not the core tax debt.
How long does penalty abatement take?
FTA can be approved in minutes. Reasonable cause can take 30–90 days.
Can a CPA help me get this approved?
Yes — and your chances of success go up significantly with a formal submission.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, based in Orange County, California.
With over a decade of experience helping individuals and businesses resolve serious IRS and State tax issues, Marc specializes in tax resolution strategies including Offers in Compromise, wage garnishment relief, and back tax compliance.
He is licensed as a Certified Public Accountant in both California and Oklahoma, and has a proven track record of helping clients settle complex tax debts and regain financial stability.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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