How to Avoid or Reduce Penalties and Interest on Delinquent Tax Accounts

 Preface – COVID changed many things for many people – working from home and staffing shortages among them. Now, as employers are living in a post-COVID world, things are getting back to normal. Workers are returning to their offices and staffing levels are back at normal levels. 

This also holds true for the IRS. Their staffing levels are back at pre-COVID numbers, and they are finished processing the incredible back-log of returns they’ve had for the last couple of years. This means that Collection letters are back, as well as stepped-up compliance enforcement levels. 

Be proactive and contact me today to get in front of your IRS issues. 


As the old adage goes, there are only two things certain in life: death and taxes. For many taxpayers, however, the latter can be a source of significant stress and anxiety. This is particularly true for those who find themselves with delinquent tax accounts, facing the prospect of penalties and interest charges that can quickly add up and create even more financial strain. Fortunately, there are steps that taxpayers can take to avoid or reduce these penalties and interest charges and get back on track with their tax obligations.


First and foremost, it's important for taxpayers to file their tax returns on time, even if they cannot pay the full amount owed. Failure to file a return can result in a penalty of up to 5% of the unpaid tax amount per month, while failure to pay can result in a penalty of 0.5% per month. By filing on time, even if payment cannot be made, taxpayers can avoid one of these penalties and reduce the overall amount of interest that will accrue on their account.


If payment cannot be made in full, taxpayers should consider setting up a payment plan with the Internal Revenue Service (IRS). This can be done through an installment agreement, which allows taxpayers to pay off their tax debt over time, typically in monthly installments. Depending on the circumstances, the IRS may also accept an offer in compromise, which allows taxpayers to settle their tax debt for less than the full amount owed. These options can help to avoid or reduce penalties and interest charges, as long as payments are made on time and in full.


Another option for taxpayers who are unable to pay their tax debt in full is to request a temporary delay in collection. This can be done by contacting the IRS and explaining the circumstances that have led to the inability to pay. While interest will continue to accrue during the period of delay, penalties will be suspended, giving taxpayers some breathing room to get their finances in order.


It's also important for taxpayers to be aware of their rights when it comes to dealing with the IRS. For example, taxpayers have the right to challenge the amount of tax owed, request an appeals conference, and be represented by a tax professional during any interactions with the IRS. By understanding these rights and taking advantage of them as needed, taxpayers can ensure that they are being treated fairly and that their tax issues are being addressed in the most appropriate manner.


Delinquent tax accounts can be a source of significant stress and financial strain for taxpayers. However, by taking proactive steps to address the issue and working with the IRS to set up payment plans or request temporary delays, taxpayers can avoid or reduce penalties and interest charges, and get back on track with their tax obligations. By understanding their rights and taking advantage of the resources available to them, taxpayers can navigate the tax system with confidence and ease.


Location: 1 Chisholm Trail Rd Bldg. 1 Suite 450, Round Rock, TX 78681, USA

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