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Avoiding IRS Tax Penalties After You Are Audited

By Edited Oct 20, 2016 0 0

Have you recently been audited by the IRS? If so, you are probably glad that the process has come and gone. Of course, this does not mean that you are in the clear just yet. You need to know how to avoid IRS tax penalties after you are audited. This way you do not find yourself in any additional trouble.

If you are audited and the IRS finds that you owe additional tax, you are in a bad spot. At this point, it goes without saying that you will probably have to pay this money – unless you can appeal the decision and win. Since the IRS has the upper hand, you need to do what you can to comply with their requests and pay what is due. If you don't, there is a good chance that you are going to be hit with additional IRS tax penalties. In this case, you will wind up owing even more money.

Those who can afford to pay the additional tax in full should do so. This way your account is back in good standing and you do not have anything else to worry about for the time being. If you pay what you owe as quickly as possible, you will be able to avoid IRS tax penalties and interest.

What if I cannot afford to pay the IRS in full at this time? You still have a couple of options. Those who decide to do nothing will find out soon enough that they are subject more penalties and potentially IRS collection actions. Rather than put yourself in this position, consider applying for an installment agreement. This means that you are allowed to pay back the money due over the course of several months. The IRS is usually easy to work with when it comes to setting up a payment plan.

Some taxpayers consider an offer in compromise. With this, the IRS agrees to let the taxpayer settle their debt for less than what is owed – even after an audit. With this option, the total amount of tax that you owe, in addition to penalties, may be reduced. The problem with this is simple: the IRS does not accept many offers in compromise. In fact, they reject the large majority of those received. Of course, if you think you may qualify it is better to try this out and be rejected than do nothing at all.

A tax audit can be a difficult time in your life. The last thing you want is to go through this process, just to find that you are now being hit with IRS tax penalties. The best way to avoid penalties is to file your return on time, file as accurately and honestly as possible and pay any additional taxes as soon as possible. If you owe more after you are audited, be sure to pay immediately or setup a payment plan with the IRS.

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