What IRS Penalties Typically Apply

IRS balances often include more than just tax.
Common penalties include:

• Failure-to-file penalties
• Failure-to-pay penalties
• Estimated tax penalties
• Accuracy-related penalties

These penalties can represent a significant portion of the total balance.

Why Penalties Continue During Payment Plans

Payment plans pause most enforcement, but they do not stop penalties from accruing.
Interest and certain penalties continue until the balance is paid in full.

This is why balances sometimes decline slower than expected.

First-Time Penalty Abatement After Payments Begin

First-time penalty abatement is available to taxpayers with a clean compliance history.
It can often be requested even after a payment plan has started.

Eligibility generally requires:

• No penalties for the prior three years
• All required returns filed
• An active payment arrangement or full payment

Reasonable Cause Abatement While on a Payment Plan

Reasonable cause abatement applies when penalties resulted from circumstances beyond the taxpayer’s control.

Common examples include:

• Serious illness or hospitalization
• Natural disasters or emergencies
• Inability to obtain records
• Incorrect IRS advice

Documentation and narrative explanation are critical.

When Timing Matters for Penalty Abatement

Timing affects both eligibility and approval.
Penalty abatement requests are more effective when:

• All returns are filed
• The account is stabilized
• IRS notices are not actively escalating

Enforcement timing is discussed here:
IRS Notices and Collection Stages.

Common Mistakes That Get Abatement Denied

Penalty abatement requests are often denied due to:

• Vague or unsupported explanations
• Requesting abatement before filing compliance
• Confusing inability to pay with reasonable cause
• Failing to align the request with IRS criteria

How Penalty Abatement Fits Into a Bigger Strategy

Penalty abatement is rarely a standalone solution.
It often works best when combined with payment plans, filing compliance, or enforcement relief.

See the full framework here:
IRS Penalty Abatement Timing.

Serving Plantation, FL Taxpayers

Polaris Tax & Accounting is physically located in Plantation, Florida and assists local taxpayers with penalty analysis and abatement requests.
Local representation matters when balances are large and IRS deadlines apply.

When to Review Penalty Relief Options

If penalties represent a large portion of your balance, a review is warranted even if payments have started.
Properly timed requests can materially reduce what you owe.

Learn more about resolution strategies here:
Plantation IRS Resolution Services.