Houston Tax Attorney – Tax Penalties

You may be subject to tax penalties if you fail to follow our tax laws or tax reporting requirements, if you do not make tax payments or deposits on time, or if you make a mistake on your tax returns.

Civil tax penalties can add to already mounting tax debt and trigger additional interest, additional penalty assessments, and may result in the IRS or state tax authorities issuing a tax lien or levying on your accounts. Criminal tax penalties can even come with jail time and restitution.

When facing a tax penalty in Houston, taxpayers should consult an experienced Houston tax penalties attorney to see if the penalty can be abated or removed or if there are other options for reducing or mitigating the liability.

About Tax Penalties

These tax issues sometimes involve math or clerical errors. In other cases they involve deliberate acts, such as not filing tax returns. It can also involve mistakes or oversights, such as being unaware of tax filing requirements.

The most common tax penalties are for failure to file, inability to pay, underpayment of tax, and inaccurate tax return filings.

We frequently work with the following civil tax penalties:

  1. Underpayment tax penalties and interest
  2. Failure to pay tax penalties and interest  
  3. Tax fraud penalties  
  4. Failure to file penalties 
  5. Accuracy and negligence penalties
  6. Frivolous submission penalties

We also work with the following criminal tax penalties:

  1. Willful failure to file a return
  2. Tax evasion
  3. Willful failure to collect or pay tax
  4. Failure to obey summons
  5. Fraud and false statements
  6. Unauthorized disclosure of information
  7. Aiding and abetting the understatement of tax

Criminal tax penalties can involve fines and possible jail time. For instance, an individual may pay up to $100,000 and imprisonment for up to five years if convicted for tax evasion. Also, the taxpayer may be ordered to pay court costs and restitution to the IRS.

If you have been assessed a tax penalty or have a question about tax penalties, we want to hear from you. Call to see how we can help.

Removing Tax Penalties

Most civil penalties can be removed or abated going forward by correcting the conduct that triggered past penalties.

The past penalties may be removed or abated based on having a good compliance history or by establishing reasonable cause. It is up to the taxpayer to seek out these remedies. The IRS typically does not offer them to the taxpayer on its own accord.

The IRS may abate or remove penalties if there is:

  1. Death or serious illness of the taxpayer or member of his/her immediate family. In the case of a corporation, estate, trust, etc., the death or serious illness must have been of an individual having sole authority to execute the return or make the deposit or payment or a member of such individual’s immediate family.
  2. In the case of the unavoidable absence of the taxpayer, a corporation, estate, trust, etc., the absence must have been of an individual having sole authority to execute the return or make the deposit or payment.
  3. Destruction by fire or other casualty of the taxpayer’s place of business or business records.
  4. The taxpayer was unable to determine amount of deposit or tax due for reasons beyond the taxpayer’s control. However, this cause will be acceptable for taxpayer’s required to make deposits or payments of trust fund taxes only when the taxpayer was unable to have access to his/her own records.
  5. The facts indicate that the taxpayer’s ability to make deposits or payments has been materially impaired by civil disturbances.
  6. Lack of funds is an acceptable reasonable cause for failure to pay any tax or make a deposit under the Federal Tax Deposit System only when a taxpayer can demonstrate the lack of funds occurred despite the exercise of ordinary business care and prudence.

These are just examples. There are other circumstances that can warrant removing penalties that should be considered.

If you receive a notice from the IRS about a tax violation, clarification, or penalty assessment, contact an experienced Houston tax attorney to understand your choices. There may be options to reduce or waive the tax penalties in your tax case. 

Kreig Mitchell LLC: The Preeminent Houston Penalty Attorney

Some taxpayers turn to tax relief companies who are staffed by master salesmen. These firms will often make promises or guarantees about being able to remove penalties. While it is true that penalties can be abated (as noted above), any promises or guarantees carry no weight. No one can predict if and how the IRS and/or courts will abate or remove penalties.

Your best bet to get penalties removed is to contact a reliable Houston tax attorney that you are comfortable working with. They can analyze your facts in light of the law and administrative procedures for the penalty in question.

Our Houston IRS tax attorneys have a successful track record in getting IRS and some state tax penalties removed or abated.

Call (281) 588-0020 for a free strategy consultation.