Living in Georgia means taxes are unavoidable. Filing all appropriate returns on time and paying what is owed is usually enough to keep most individuals off the IRS’ radar. However, if you have trouble paying your taxes, have fallen on hard times or have encountered some circumstances that have kept you from honoring your tax obligations in a timely manner, you could end up with a higher tax bill due to the accrual of interest and penalties.
Fortunately, the IRS understands that life happens. There are solutions for people who find themselves in trouble with their taxes to help mitigate their situations. One is the reasonable cause penalty abatement. Not everyone who thinks they should qualify does. Here is a brief overview of how death and illness affect eligibility.
Extenuating circumstances like death or serious illness
Certain events in life are unavoidable, like death and sickness. If an immediate family member is ill or dies and that circumstance creates a hardship that prevents the timely filing of returns, payment of taxes or adherence to any payment arrangements, the filer may fill out a request to have all associated penalties and interest removed.
Requests require proof
It is not enough to claim that illness or death was the reason why you may have fallen behind on your taxes; you will need to provide proof. Be prepared to provide the date and time of death or the date, length of sickness and medical documentation. A valid reason explains how the circumstance kept you from taking care of your taxes, i.e., you were unable to manage your taxes because you were so ill that you were in the hospital receiving treatment, or that you were too ill or too bereaved from the loss of an immediate family member to make legally sound decisions.
Keep in mind that the IRS uses other factors to approve or deny a reasonable cause penalty abatement request. Factors that weigh heavily in your favor include how soon you filed or paid your taxes after recovery or return from bereavement, if there are any other outstanding tax obligations from previous years and whether the person who was ill or died was an immediate member of your family (spouse, child, stepchild, sibling, parent or grandparent).