The IRS can assess penalties and interest for a variety of reasons. The most common reason is the failure to file penalty assessed by the IRS when a taxpayer does not file his/her tax return by the due date or any extension.
However, the IRS may also penalize the taxpayer for deductions not supported by documentation, for failing to claim income received or abusing the tax system.
Many times these penalties may be removed when the taxpayer legitimately relied on a tax professional or has some other basis for removing the penalty. Interest is attached to any payment deemed “past due” by the IRS and generally cannot be reduced or removed.
If you cannot afford to pay the IRS, you can arrange installment plans or submit an Offer in Compromise. If the IRS has incorrect information, you can file amended tax returns to correct the IRS information.