07/11/2026
Got a Letter from the IRS? Don’t Pay That Penalty Just Yet.
One of the hardest phone calls I get goes something like this:
“Jessica, I just got a letter from the IRS. They say I owe another $1,200 in penalties. Do I have to pay it?”
My answer is almost always the same:
Maybe. But let’s look at it first.
Most people do not realize that just because the IRS sends a penalty notice does not automatically mean you owe every dollar on it.
In some cases, the IRS may remove the penalty. In other situations, you have the right to ask them to.
****What kinds of penalties are we talking about?
The most common ones are:
* Filing your tax return late
* Paying your taxes late
* Businesses making payroll tax deposits late
These penalties can add up quickly, especially when interest is added.
****Can the IRS remove a penalty?
Sometimes, yes.
You may qualify if you have a good history of filing and paying your taxes on time.
The IRS may also consider removing a penalty when something serious happened, such as:
* A major illness
* A death in your immediate family
* A natural disaster
* Records that were lost or destroyed
* Another situation that was outside of your control
Every situation is different, which is why it is worth having someone review the notice before you pay it.
****Don’t ignore the letter
Even if you think the IRS made a mistake, do not put the notice in a drawer and forget about it.
Penalties and interest can continue to grow, and ignoring the letter can create bigger problems later.
****What should you do?
Before you send the IRS a payment:
* Read the notice carefully.
* Find out exactly why the penalty was charged.
* Check whether you may qualify for penalty relief.
* Pay attention to the response deadline.
Sometimes, the difference is simply knowing what to ask and how to respond.
****example
We recently worked with a client who was ready to pay more than $2,000 in IRS penalties.
Before they sent the payment, we reviewed the notice and their filing history. Based on the facts, we determined that they may qualify for penalty relief.
Instead of paying the penalty immediately, they were able to request that the IRS remove it.
Every case is different, and results are never guaranteed. But this is exactly why it is important to review the notice before assuming the penalty is final.
At TaxSpace, we help taxpayers understand IRS letters that are confusing or overwhelming.
Sometimes the penalty is correct.
Sometimes it is not.
And sometimes there may be a way to reduce or remove it.
If you received an IRS notice and are not sure what to do next, contact TaxSpace before you pay it. A quick review could save you money and a lot of unnecessary stress.
****Penalty relief depends on each taxpayer’s individual facts and circumstances.
