Part III Penalties and Interest (Problems 6-10)

Each year, the IRS issues well over thirty million penalties against individuals and businesses.

Revenue from these assessments is often in excess of $15 billion. As a result, this is one of the largest sources of continuing frustration for citizens. Every year, the Taxpayer Advocate's Annual Report to Congress places penalties high on the list of the twenty most serious problems faced by citizens. A survey by the IRS of tax professionals shows that professionals consider penalties to be the fifth most serious problem faced by citizens. Fortunately, there is a simple and highly effective method of dealing with penalties. Unfortunately, the IRS does not often tell the truth about the procedure.

To make matters worse, interest on a tax bill often doubles, triples--even more--the debt. And this is one area where the IRS flat lies about one's right to deal with the problem. IRS publications declare that interest is always added and can never be canceled from a delinquent debt. While that is true in many cases, it is not a universal rule. There are several circumstances under which interest is legally subject to cancellation and like penalties, the procedure is quite simple.

Problem 6 The IRS issued a computer notice claiming I owe penalties
Problem 7 The IRS added penalties to my previous bill
Problem 8 The IRS added penalties to a bill determined from a tax audit
Problem 9 The IRS assessed the trust fund recovery penalty
Problem 10 The IRS unfairly added interest to my tax bill

The following books were mentioned in the above problems:
How To Win Your Tax Audit, The IRS Problem Solver, Taxpayers' Ultimate Defense Manual