Video transcript:
Hello, I'm Sara from TurboTax with some important information on getting your tax penalties waived. Not paying your taxes on time without IRS consent, may have pretty severe consequences. Not only do you have to pay interest on the amount you owe until it's paid off, but you may be responsible for penalties which can tack on another 25 percent to what you already owe.
However, the IRS is permitted to reduce or completely waive these penalties if you prove to them that you had a reasonable cause. Reasonable cause is a pretty high standard that usually requires extenuating circumstances.
For example, losing all your financial documents in a fire or other disaster or suffering from a severe illness may get your penalties waived. But remember if you claim that your reason was due to an illness, the IRS may require a lot of proof to be convinced and generally telling the IRS that you are on vacation on the tax deadline or that you didn't realize the deadline was approaching will not get you very far.
If you are unable to get the penalties waived and cannot afford to pay in full it may benefit you to enter into an installment agreement to make manageable monthly payments. You can also try to reduce the actual amount of tax you owe by making an offer in compromise. If you go this route, be prepared to convince the IRS that you will suffer an economic hardship without the compromise.
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