Penalty notice

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Updated: 1/10/2008 10:29 am Published: 1/10/2008 10:29 am

Dan Pilla of The common belief is that the IRS can charge penalties simply if you make an error in your return. In fact, last year alone, the IRS charged more than 36 million penalties against individuals and businesses. I explain in my book, The IRS Problem Solver, that the IRS can’t collect penalties just because you made a mistake. When you act in good faith, and based upon a reasonable cause for your actions, and not out of deliberate disregard of IRS rules, penalties don’t apply. If you get a penalty notice, first check to see if in fact you made a mistake. If not, respond in writing within 30 days. Point out the IRS’s error and request the penalty be canceled. Since many penalties are wrong, they’re canceled with this simple process. But if you did make a mistake in your return, explain that you acted in good faith and based on a reasonable cause. You chances of having the penalty canceled are far greater than you might think.

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