IRS Penalty Abatement — Maryland, DC & Virginia

When you owe back taxes, the IRS doesn't just collect the original amount — they add failure-to-file penalties, failure-to-pay penalties, and interest. These additions can be enormous. Penalty abatement is the process of requesting that the IRS reduce or remove these penalties.

First-Time Penalty Abatement (FTA): If you have a clean compliance history (no penalties in the prior 3 years) and are now in compliance, you may qualify for FTA. This is the most reliable and fastest form of penalty relief. It can be requested by phone or in writing and applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties.

Reasonable Cause Abatement: If FTA doesn't apply or doesn't cover everything, you can request abatement based on reasonable cause — circumstances beyond your control that prevented timely filing or payment. Valid reasons include serious illness, natural disasters, death of a family member, or reliance on incorrect professional advice. The documentation and argument matter enormously here.

Statutory Exceptions: In some cases, the law itself provides penalty relief, such as during federally declared disasters or for specific types of tax situations.

State penalty abatement: Maryland, Virginia, and DC all have their own penalty systems. The Maryland Comptroller, Virginia Department of Taxation, and DC OTR each have abatement procedures. We handle all three.

Penalty abatement should typically be pursued before settling on an installment amount or OIC — a lower underlying balance produces lower payments and better settlement terms.