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IRS Penalty Abatement due to Economic Hardship:

Updated: Jun 28

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IRS Penalty Abatement.

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IRS Penalty Abatement due to Economic Hardship

Did you know that the IRS has almost 150 different types of penalties that they can hit you with? If there's anything worse than learning you owe more of your hard earned money to one of the most ruthless collection agencies in the world, it's also learning that you're being penalized as well.

While IRS penalties can be ruthless, if you find out you're being penalized, all hope is not lost. In fact, the IRS does abate penalties. One way to have your IRS penalties abated is under the reasonable cause argument. While there are 9 main ways to get your penalties abated due to reasonable cause, this blog post will focus on the "undue economic hardship" argument.

If you find yourself owing $10,000 or more to the IRS or a state taxing entity, reach out to us today for a FREE consultation at And just so you know, we've successfully negotiated the abatement of hundreds of thousands of dollars in IRS penalties on behalf of our clients to date!

How to get your IRS penalties abated in Mansfield and Arlington, TX
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Undue Economic Hardship Criteria

In order to have IRS penalties abated due to undue economic hardship, here are some of the criteria the IRS considers:

  • The Taxpayer must show substantial loss if required to pay a tax on the due date.

  • Financial records are required to prove such a hardship:

    • bank statements, bills, payments, assets, liabilities, etc.

  • Did the Taxpayer make "discretionary expenditures" prior to paying the tax on the due date.

    • Kids tuition, vacations, cars, houses, unnecessary remodeling, etc.

  • When did the Taxpayer recognize they could not pay?

  • Why was the Taxpayer unable to pay?

  • Did the Taxpayer explore other means to secure/raise funds?

  • What documentation can the Taxpayer provide?

Ultimately, penalty abatement under economic hardship is determined on a case by case basis. Obviously, the more documentation that can be provided to demonstrate a legitimate economic hardship, the greater the chances of having penalties abated based on this criteria.

While tax penalties can add a significant burden, with a proactive approach and a solid understanding of tax regulations, they can be minimized or avoided. Engaging a tax relief professional such as your premier tax resolution experts at Liberty Tax Defenders can provide personalized advice and assistance, ensuring you remain compliant while minimizing your tax burden.

Don't forget to reach out to us today for a FREE consultation!

To your success!

P.S. Make sure you get your FREE copy of our SPECIAL REPORT: "The 7 Secrets The IRS Does NOT Want You To Know!" (simply click on the link in the previous sentence, scroll down to the second section of our home page, and download your copy today!)

Or, email us at: for your FREE copy.


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