As the new year begins, your thoughts may be turning to your tax situation. Like nearly everyone else across the country, including people here in Missouri, the last thing you want is to end up in a bad situation with the IRS.
However, the tax code was complex enough before the new tax laws went into effect, and it may be easier to end up in trouble with the federal taxing authority than in the past. For this reason, it would probably be wise to familiarize yourself with situations that could result in penalties from the IRS.
Common Tax Penalties
Some tax situations could end up with you receiving a notice from the IRS that the agency assessed penalties against you, including those below:
- If you file your return, but it contains incorrect or fraudulent information
- If you file your return but take a frivolous position
- If you fail to file a return when the tax code requires it
- If you fail to file your return on time
- If you fail to pay your taxes when due
- If you fail to make estimated payments during the year when the IRS believes you should
- If you don’t take the required minimum distributions from a tax-favored retirement account
- If your contributions to a tax-favored retirement account, such as an IRA, are too high
- If you take early withdrawals from a 401(k), IRA or other tax-favored retirement account
- If you take unqualified withdrawals from health savings accounts, 529 plans or other similar accounts
The penalties could reach as high as 75% of the debt the IRS says you owe. Of course, just because the IRS assesses penalties against you based on one of the above situations does not mean that the agency is right and that you have no recourse. It may be possible to have the penalties removed or reduced based on your unique situation.
Contact The Law Firm of Lance R. Drury
You can attempt to negotiate with the IRS on your own, but more than likely, that would not end well. Instead, you can take the time to consult with a tax attorney who can explain your rights and legal options, and assist you in your communications with the IRS.
In order to avoid missing any relevant deadlines regarding your appeal of the penalty assessment, the sooner you schedule a consultation, the better.