Avoid IRS Tax Penalties By Establishing “Reasonable Cause” For Failing to File and Pay Your Taxes
If you failed to file and pay taxes one year due to severe emotional or physical illness that disabled you from managing your finances, you may be able to escape paying the IRS tax penalties for that year–as long as you can prove the existence of a “reasonable cause” with strong evidence. If your illness incapacitated you from filing and paying taxes for multiple years, you may be eligible to not pay the IRS tax penalties for any of those years as long as you have strong evidence to support your case for each of the years.
Recently, a self-employed physician was found not liable to pay the tax penalties for one year during which she was emotionally ill and unable to manage her finances.
CCH (http://tax.cchgroup.com/) reports:
Physician Had Reasonable Cause for Failure to File and Pay Tax, Penalties Not Imposed
A self-employed physician who received significant income and incurred expenses for the tax years in issue was not liable for additions to tax for failure to file a return, failure to timely pay tax or failure to pay estimated taxes for one of the years in issue. She established through testimony that her failure to file and to pay tax was due to her illness. She testified that she stopped working because of emotional problems and that she was unable to manage her finances. The taxpayer did not establish reasonable cause for the other tax year, however because she provided no evidence that she suffered from any illness or incapacity when that return was due.
The burden of proof is on you as the taxpayer to prove to the IRS that you were unable to manage your finances due to an illness. It is important for you to build and make a strong case so that the IRS does not penalize you for your “reasonable cause” of not filing and paying taxes.
Tax Resolution Services can help defend you against harsh and unjustified IRS tax penalties. You may get help from our specialized staff of tax attorneys, CPAs, EAs and tax professionals at TRS. Visit Tax Resolution Services for a free income tax relief consultation or call us at 866-IRS-PROBLEMS (1-866-477-7762).
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