In this episode, Amro Badran sits down again with Christopher Nichols, Director of Tax Resolution at Badran Tax and a retired IRS Revenue Officer and Appeals Settlement Officer, to explore the topic of penalty abatement. Chris shares valuable insights on how taxpayers can request the IRS to remove penalties and interest charges. With expertise in IRS procedures, Chris walks listeners through the process of filing for a reasonable cause abatement and the steps to take when penalties arise.

Christopher Nichols also explains the various circumstances under which penalties can be abated, including serious illness, natural disasters, and mistakes made by tax professionals. Whether you're a business owner or an individual taxpayer, understanding the right steps to take can save you significant amounts of money.

Expect to Learn:

1. What reasonable cause abatement is and how it works with the IRS.
2. Key factors the IRS considers when deciding to remove penalties and interest.
3. How personal situations like illness or loss of records can impact your eligibility for abatement.
4. The importance of documentation and verification when filing for penalty abatement.
5. Tips for ensuring a successful penalty abatement request.

Episode Breakdown with Timestamps:

[00:00] – Introduction to penalty abatement and the IRS process

[01:00] – What is the reasonable cause of abatement?

[03:06] – Key criteria for reasonable cause: illness, death, and more

[06:14] – The importance of providing documentation to support your case

[08:00] – What to do if the IRS denies your penalty abatement request

[10:24] – The form for penalty abatement and its role

[11:30] – How long the abatement process takes and when penalties continue to accrue

[12:57] – What happens if the penalty is paid before the abatement request is processed

[13:30] – How to deal with multiple penalty abatements across different years

[15:12] – Special cases: filing late due to unforeseen circumstances

[17:25] – Can spouses blame each other for penalties?

[18:41] – Resolving issues caused by a tax preparer’s mistake

[19:01] – Wrap-up and final advice for penalty abatement requests

Follow Christopher Nichols:

👉 LinkedIn: https://www.linkedin.com/in/christopher-nichols-b1b515355/

🔗 More from Tax Resolution:

👉 Website: https://badrantax.com/

👉 LinkedIn:https://www.linkedin.com/in/amro-badran/

👉 Instagram:https://www.instagram.com/badrantax/

👉 Facebook:https://www.facebook.com/badrantax

👉 TikTok: https://www.tiktok.com/@badrantax

Follow the Podcast:

👉 YouTube: https://www.youtube.com/@badrantax

👉 Apple Podcast: https://podcasts.apple.com/us/podcast/tax-resolution-the-badran-way/id1858507497

👉 Spotify: https://open.spotify.com/show/4Rz4nHO16Z0LJs5b9b60lb?si=aee5a07c81a74ae3

In this episode, Amro Badran sits down again with Christopher Nichols, Director of Tax Resolution at Badran Tax and a retired IRS Revenue Officer and Appeals Settlement Officer, to explore how taxpayers can reduce or eliminate IRS penalties using the First-Time Penalty Abatement (FTA) program. They clarify common myths around IRS penalties, explain what types of penalties qualify, and share critical insights into how and when to request an abatement. This episode is packed with actionable tips for individuals and businesses looking to manage or reduce their IRS debt more effectively.

• Why the IRS issues high penalties and how they promote voluntary compliance.
• The requirements and timing for qualifying for First-Time Penalty Abatement.
• Why hiring a tax professional can help avoid costly mistakes with IRS penalties.
• Common misconceptions about IRS interest and penalty relief.
• What to do if your penalties stem from IRS errors or substitute tax returns.

• [00:00] - Introduction and Chris Nichols’ IRS background
• [01:17] - Can IRS penalties and interest be removed?
• [02:45] - Why the IRS charges high penalties and interest
• [04:19] - Filing vs. paying: why you should always file on time
• [05:42] - Overview of First-Time Penalty Abatement and how it works
• [07:05] - Who qualifies for FTA and how often it can be used
• [08:12] - Why timing is crucial when requesting a penalty abatement
• [10:00] - The four types of penalty relief options
• [12:00] - Best strategy: pay first, then request abatement
• [14:00] - Penalties from audits, substitute returns, and large 1099 errors
• [17:20] - Does the size of the penalty matter to the IRS?
• [18:51] - FTA applies to businesses and individuals alike
• [21:30] - Why most taxpayers don’t know FTA exists
• [22:24] - How interest on penalties works and what can be reduced
• [23:44] - How IRS encourages compliance with reduced interest on agreements
• [24:20] - Teaser for next episode: Reasonable Cause Penalty Abatement

Follow Christopher Nichols:

👉 LinkedIn: https://www.linkedin.com/in/christopher-nichols-b1b515355/

🔗 More from Tax Resolution:

 👉 Website: https://badrantax.com/

👉 LinkedIn:https://www.linkedin.com/in/amro-badran/

👉 Instagram:https://www.instagram.com/badrantax/

👉 Facebook:https://www.facebook.com/badrantax

👉 TikTok: https://www.tiktok.com/@badrantax

Follow the Podcast:

 👉 YouTube: https://www.youtube.com/@badrantax

👉 Apple Podcast: https://podcasts.apple.com/us/podcast/tax-resolution-the-badran-way/id1858507497

👉 Spotify: https://open.spotify.com/show/4Rz4nHO16Z0LJs5b9b60lb?si=aee5a07c81a74ae3

In this episode, Amro Badran sits down with Christopher Nichols, Director of Tax Resolution at Badran Tax and a former IRS Collection Revenue Officer and Appeals Settlement Officer, to demystify the Offer in Compromise (OIC) process. They cut through the misleading "settle for pennies on the dollar" advertising and explain the three core collection categories and, crucially, the three different types of OICs. Learn how the IRS calculates your ability to pay, why filing an OIC can sometimes extend your tax collection period, and what you must do to stay in compliance both before and after your offer is accepted.

• OIC Reality Check: Understand that the IRS accepts only about 30% of OICs filed, making pre-submission analysis essential. 
• The Three Offer Types: A breakdown of Doubt as to Collectibility (the most common), Doubt as to Liability, and Effective Tax Administration (Hardship) offers. 
• Reasonable Collection Potential: How the IRS determines your ability to pay by calculating your monthly income/expenses and the liquidation value of assets like home equity and vehicles. 
• Statute of Limitation Risk: The critical warning that filing an OIC freezes and extends the 10-year Collection Statute Expiration Date (CSED). 
• Compliance Requirement: The non-negotiable rule is to be in full filing compliance for the last six years prior to submitting the offer and for five years after acceptance.

[00:00:00] - Introduction to Offer in Compromise (OIC) and the three collection categories

[00:03:36] - Offer in Compromise Acceptance Statistics (FY 2023 and FY 2024)

[00:05:07] - The benefit of OIC for the IRS (clearing liabilities from their books)

[00:06:22] - Forms required to file an OIC (Form 433 and Form 656) and the role of net monthly income

[00:07:10] - The three basic types of Offers: Doubt as to Collectibility, Doubt as to Liability, and Effective Tax Administration (ETA)

[00:09:24] - Effective Tax Administration (ETA) and hardship examples (e.g., medical expenses for the elderly)

[00:14:12] - Ideal OIC candidates (people with no ability to pay and no assets)

[00:15:17] - Warning: Filing an OIC freezes the Collection Statute Expiration Date (CSED)

[00:23:00] - Post-acceptance requirement: The 5-year compliance contract (Form 656)

[00:23:38] - Application fees, low-income exemption, and the difference between Lump Sum and Periodic Payment offers

[00:27:44] - Requirements after an OIC is accepted (payments and continuing compliance)

[00:33:04] - The 3-year lookback period for "dissipated assets" (e.g., cashed-in retirement or inheritance money)

[00:35:09] - IRS criteria for high-profile tax cases (high dollar amount, politicians, and professional athletes)

[00:36:44] - The OIC calculation is based on the ability to pay, not the amount owed

Follow Christopher Nichols:

👉 LinkedIn: https://www.linkedin.com/in/christopher-nichols-b1b515355/

🔗 More from Tax Resolution:

 👉 Website: https://badrantax.com/

👉 LinkedIn:https://www.linkedin.com/in/amro-badran/

👉 Instagram:https://www.instagram.com/badrantax/

👉 Facebook:https://www.facebook.com/badrantax

👉 TikTok: https://www.tiktok.com/@badrantax

Follow the Podcast:

 👉 YouTube: https://www.youtube.com/@badrantax

Are you dreading that letter from the IRS? Do you feel overwhelmed by years of back taxes, audits, or wage garnishments?

You don't have to face the tax man alone.

Introducing Tax Resolution: The Badran Way! Hosted by Amro Badran, a trusted Enrolled Agent who brings over 40 years of unparalleled experience practicing before the IRS.

You will gain expert insights, proven strategies, and real-world solutions that have helped clients nationwide save thousands and finally find tax peace. If you need tax problem resolution, expert consultation, or just want to learn how to master the tax code, this is your essential guide.

Tax Resolution: The Badran Way is coming soon to your favorite podcast platform. Subscribe now so you don't miss the very first episode!