201901.21
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Penalty Abatement vs. Amnesty – Apologize or Ask For Forgiveness?

Penalty Abatement vs. Amnesty - Apologize or Ask For Forgiveness? (Golding & Golding)

Penalty Abatement vs. Amnesty – Apologize or Ask For Forgiveness? (Golding & Golding)

Penalty Abatement vs. Amnesty – Apologize or Ask For Forgiveness?

When it comes to the IRS and Penalties, it is always easier to try to avoid IRS penalties than it is to ask the Internal Revenue Service to remove penalties from your account.

The difference between penalty abatement and tax amnesty, is sort of like the difference between apologizing first vs. asking for forgiveness later.

Penalty Abatement vs. Amnesty

With Amnesty you are making a proactive submission to the IRS (via Amnesty or Voluntary/Streamlined Disclosure), in which you acknowledge your mistake, and request that penalties not be issued.

If you are seeking an Abatement, then unfortunately the IRS has already issued penalties. Therefore, not only is it harder to try to get the Internal Revenue Service to remove the penalties, but you are under a tighter deadline.

IRS Deadlines for Penalty Abatement

If you are proactive and submit an amnesty or disclosure request, the main two timelines to be cognizant of are whether or not the IRS discontinues the program, or if they find you first (and penalize you).

If penalties have been issued, the clock has started as to the amount of time you have to respond.

These timelines may impact:

  • CAP (Collection Appeal Process)
  • CDP (Collection Due Process)
  • Avoiding a Notice of Levy
  • Avoiding a Seizure
  • Avoiding an IRS Passport Revocation

I’ll Just Wait and See…

As with most things in life, the old wait and see attitude will get you nowhere. When it comes to IRS penalties, if you wait too long and the IRS finds you first, the penalties can be staggering.

FBAR Willful Penalties can reach 100% value of the account, Form 3520 Penalties are generally being assessed annually at 25% value of the gift, and 5471 and 3520-A Penalties are usually $10,000 per form, per year.

What Should You Do?

Everyone makes mistakes. If at some point that you should have been reporting your foreign income, accounts, assets or investments the prudent and least costly (but most effective) method for getting compliance is through one of the approved IRS offshore voluntary disclosure program.

4 Types of IRS Voluntary Disclosure Programs

There are typically four types of IRS Voluntary Disclosure programs, and they include:

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International Tax Lawyers - Golding & Golding, A PLC

International Tax Lawyers - Golding & Golding, A PLC

Golding & Golding: Our International Tax Lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70 different countries. Managing Partner, Sean M. Golding, JD, LL.M., EA and his team have represented thousands of clients in all aspects of IRS offshore disclosure and compliance during his 20-year career as an Attorney. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo and various Law Journals nationwide.

Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)
International Tax Lawyers - Golding & Golding, A PLC