Everything You Need to Know to Catch Up, Avoid Penalties, and Move Forward
Introduction
If you’ve ever opened an IRS letter and seen the word “penalty”, you know the feeling — stress, fear, confusion. The IRS charges penalties for everything from late filing to underpayment, and the costs add up quickly. But here’s the good news: you may not have to pay all of it.
In this post, Marc Albaum CPA, with over 40 years of hands-on experience, breaks down what penalties are, why they happen, and how you can potentially reduce or eliminate them entirely.
What Are IRS Penalties?
The IRS can penalize you for a variety of reasons. The most common include:
Common Types of Penalties:
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Failure to File Penalty
For not submitting your tax return on time. -
Failure to Pay Penalty
If you file but don’t pay your taxes by the deadline. -
Estimated Tax Penalty
For not paying enough taxes throughout the year if you’re self-employed or don’t withhold properly. -
Accuracy-Related Penalty
Due to significant errors or understatements on your return. -
Fraud Penalty
A serious penalty with much higher fines — often 75% of the underreported amount.
The Real-World Impact of Penalties
IRS penalties don’t just sit there — they grow:
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Interest is charged on top of penalties.
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Your debt snowballs over time.
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You risk liens, levies, and credit damage.
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Penalties can push a manageable tax bill into a financial crisis.
How Marc Albaum CPA Helps You Fight Back
Marc doesn’t just tell you what you owe — he fights to reduce it. He personally works with clients to:
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Analyze the penalty details
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Identify causes and potential for abatement
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Prepare and submit Penalty Abatement Requests
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Speak directly to the IRS on your behalf
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Prevent further penalties through compliance planning
What Is IRS Penalty Abatement?
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“Abatement” simply means removal or reduction.
The IRS offers three main ways to request penalty relief:
First-Time Penalty Abatement (FTA)
You may qualify if:
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You filed all required returns in the past three years
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You have a clean penalty history
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You’re currently in compliance or have a plan in place
Reasonable Cause Relief
This is based on your individual circumstances, such as:
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Serious illness or death in the family
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Natural disasters
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Loss of records (fire, theft, etc.)
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Relying on bad professional advice
Marc helps you document and explain your situation in a compelling, compliant way.
Statutory Exception
This applies in limited legal or IRS error scenarios, such as receiving wrong instructions in writing.
Why Working With a CPA (Not a Tax Mill) Matters
Big tax resolution companies often promise results they can’t deliver — and disappear once they’re paid.
Marc Albaum, on the other hand:
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Has been a licensed CPA since 1984
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Handles every case personally — no staff or salespeople
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Has been featured in The New York Times, CNBC, and more
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Is trusted by real clients to deal with the IRS directly
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Offers flexible payment plans for those who qualify
What You’ll Need to Apply for Penalty Relief
When working with Marc, here’s what’s typically needed:
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A full breakdown of the penalties you’ve been charged
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Documentation supporting your “reasonable cause”
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Prior return history
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Proof of current filing/payment compliance
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A formal written request (Marc drafts and files this for you)
FAQs About Penalty Abatement
❓ Can penalties really be removed?
Yes — if you qualify and submit the correct documentation.
❓ Will interest also be removed?
Generally, no. Interest on the penalty is removed only if the penalty itself is removed.
❓ What if I already paid the penalty?
You can still request a refund in some cases.
❓ Do I need to be fully paid up first?
No — you just need to be in a payment plan or compliant with current filings.
This is a great reminder that financial planning isn’t just about numbers; it’s about aligning your money with your life goals. Physician Lifecycle Planning can help you make the most of your earning potential while ensuring you’re also prioritizing your well-being and quality of life.