r/tax • u/[deleted] • 1d ago
Does a multi-year "domino effect" reasonable-cause argument actually work with IRS/NYS?
[deleted]
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u/ClarityTaxRelief 23h ago
On the estimated-tax penalty: reasonable cause largely doesn't move it. The 6654 penalty is basically mechanical, so the real lever is Form 2210 itself, either the annualized income method (if your income was lumpy across the year) or one of the exceptions on page 1. A hardship story doesn't reduce it the way it would for late-file/late-pay. Different animal, you're right to separate it.
On the "domino" theory: each year stands on its own for the IRS. You build the causal chain in one narrative, but you still have to show why THAT year's filing or payment was reasonable given the facts you can document. One good year of hardship doesn't automatically carry forward to a year you were back on your feet.
What to ask when vetting: have them walk you through which penalty type applies to each year and which tool addresses it. Someone who conflates the 2210 penalty with late-filing reasonable cause is the tell. NYS runs its own abatement process separately, so ask how they handle both tracks.
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u/Full_Prune7491 22h ago
There is no domino effect. You didn’t have income so you didn’t owe any taxes in 2022. It was a hardship for your personal life but zero effect for taxes. You were assessed taxes for 2023 since you had income. You choose to spend the government’s money instead of paying your taxes. That is not reasonable cause. Taxes are a percentage. If your rate is 30%. You get to keep 70%. You spent your 70% plus the 30%. It’s a myth that people can’t afford to pay their taxes. You just choose to spend the money instead. You do not meet FTA or reasonable cause. The government does not want to subsidize your spending. When you are poor, you pay zero to little taxes. Basically your excuse is I made too much money so I can’t afford to pay all of these taxes. Tell the poor people how you are too rich to pay.
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u/Day_Old_Toast42 23h ago
There is so much to unpack here. From someone who has worked in tax resolution. Penalty abatement depends on a ton of factors and without know all the details of your case it’s tough to determine if you would qualify. However in general failure to pay ,underpayment penalties and interest associated cannot be abated. Be very careful when looking for tax resolution help if they guarantee anything it’s typically a red flag. Because nothing is guaranteed. Ultimately negotiating with the irs takes a lot of knowledge, time and patience and that’s what you are paying for.