Effective Invoice Late Payment Fee Wording for Planning

Invoice late payment fee wording for Planning

welcome back to our Channel clear belly tax my name is Brian Kim I'm a certified public accountants and today we will be discussing how to get out of a penalty with the IRS or state so this video will cover personal taxes if we're talking business taxes and penalties for businesses that's a whole separate animal and we're not gonna get into n this video this is covering just personal taxes so you most likely receive the penalty for the three most common ones are late filing penalty late payment penalty and an underpayment penalty under payment penalty is regarding you not sending in estimated tax payments or just having a large balance due so those are the three penalties that this video will be covering on how to get out of the penalty okay so what you need to do is give reasonable cause so that is the key word you need to give reasonable cause you need to give a good excuse and your excuse has to have a reasonable cause okay so what are the most common reasonable cause excuses that work well from my experience I can tell you that they're gonna be health-related they're gonna be sickness they're gonna be depression or death in the family so usually when you write one of those as reasonable cause they're going to be accept acceptable cases of reasonable cause you can't you can't just say things like oh I just forgot or you know some lame excuse it's not gonna work it's gotta be a reasonable cause and they have their own definition of what's acceptable what's not and I can tell you those excuses usually work so I say usually because no they're not gonna work 100 percent of time it's a case by case scenario and they're gonna give you a yes or a No they're gonna say yes we're gonna accept your reasonable cause we're gonna eliminate the penalty or they're just gonna flat out say denied they're gonna say no they're not well I've never seen this but they're not going to say thank you for your reasonable cause we want evidence we want proof we want this oh you're you're you said depression well let me see you know doctors visited or doctors know oh you said death in the family okay let's see that that certificate or let's see you know evidence no they're just gonna say accepted yes or they're gonna say denied no and it's as simple as that so it's gonna be a yes/no okay I'll say that if you have a good history of filing and paying on time this reasonable con these excuses for reasonable cause it's probably any work from my experience I'll say it's gonna work eighty percent of the time that's if you have a good history and a lot of times if you've always timely filed or timely paid you know there's a first time penalty waiver and it'll even work greater than eighty percent of the time so just know that they're gonna look at your history if you have a bad history if you are I mean if it's all computerized it's in their system if you have a bad history of late filing or late payments I would say even if you have reasonable cause I mean it'll probably work less than ten percent of the time that's just from my experience because I've I've assisted in these cases of trying to get the penalty waived and if you have a bad history Wow I mean that really works against you so you know just expect to feel a high failure rate if you have a bad history so just know that okay so if he wants to have as many attempts as possible to get off this penalty okay let's just say you get the letter that says you filed lates this is your penalty or you paid late this is your penalty if you want as many attempts as possible to just increase the probability of this working for you I would say first okay you get the letter try by phone because the IRS agents they have the power to just make that decision at that discretion at their discretion by phone so you could do this is gonna be super informal you know you get the letter it says you can contact us here at this specified phone number for your case try giving them a call try to resolve and give you a reasonable cause of your excuse by phone so they're gonna say yes or no okay if they say yes great you just say you just saved money you got off you got off the penalty if they say no well okay you know that attempt got rejected so what you can do is you got that letter the penalty you can respond to the letter in writing informally just citing you know your reasonable cause you know why you should not be subject to this penalty and just mail that it you know it's going to be addressed to the left to the address listed on the letter so that's your second attempt and if they say yes they accept it then great you got off the penalty if you got rejected well then well that mean that that's that's terrible okay so if that was your second attempt and it failed then what you can do is the official penalty abatement form and that's gonna be your last resort because you tried informally by phone you tried informally by responding to a letter and your third one will be the official penalty abatement form so those are your you know three attempts that you can do hopefully you can just take care of it by phone or if you don't want to talk to the agent hopefully you can just take care of it with the informal response to the letter the penalty letter so that's just another piece of advice if you want to maximize the probability of you getting off this penalty well it's just a numbers game the more attempts that you make the greater chance you have getting it approved so that's just my advice again this is with the IRS and the states the state that's gonna be dependent upon your state but when I say state that's the Department of Revenue so we're not talking about Secretary of State Secretary of State is much more harsh or not as lenient a lot of Secretary of State's they have a zero-tolerance policy so they're not gonna accept any excuses you didn't do this on time or make us pay on time you're gonna penalize zero tolerance zero tolerance policy so from what I can say is that the IRS they are the most lenient when comparing to the state and they're morally neither very lenient actually when it comes to people with good histories and just a history of timely payments timely filings so just know that so you know if you're considering should I give this a shot you know is it is it worth my time well I mean you you really don't have that much to lose and just know that if you are good if you have a good history you actually stand a high probability of getting off the penalty so that's just my advice if you have any questions please leave them below I'd be happy to get back to you if you find this helpful please give us a like I'd really appreciate that we look forward to making more videos we hope you found this helpful thank you so much take it