Guide to Texas Penalty Waiver (Abatement) & Form 89-224, 89-225

The Texas Comptroller allows taxpayers the right to remove or reduce penalties and interest through a penalty waiver. Penalties and/or interest may be abated if you have a valid reason for filing or paying your tax report late.

How to Qualify for a Penalty Waiver in Texas

To qualify for a penalty waiver in Texas, you or your business must meet the following criteria:

  • You are current with all state tax filing and payment obligations.
  • You haven't received a waiver in the last two years — exceptions may be granted if you have extenuating circumstances.
  • You are within the four-year statute of limitations from the date that the tax became due.
  • The Comptroller's office has not frozen your bank account or seized your assets. 
  • Your tax bill has not been outsourced to a third-party collector
  • Your business doesn't have an inactive registration with the Texas Secretary of State. 

You must pay the underlying tax to request a penalty waiver. If you also paid the penalties, you will get a refund if your waiver is accepted.

 

How to Apply for a Penalty Waiver in Texas

You can apply for a penalty waiver using Form 89-224 (Request for Waiver of Penalty for Late Report and/or Payment) or Form 89-225 (Request for Waiver of Penalty for Failure to File and/or Pay Electronically). These forms are available on the Texas Comptroller's website

Both forms require contact details for you or your business. You also must list the tax type, filing type (yearly, quarterly, or monthly), the last month of the reporting period, the year the report was due, and the amount of the penalty you want to be waived. Then, you need to explain why your payment or report was late and what you have done to correct the issue.

Once you have completed the forms, you can mail or email them to the Comptroller of Public Accounts. Alternatively, you can write a letter, but you need to include all the details noted on the above forms.

Reporting Periods Eligible for Penalty Waivers

The Texas Comptroller's office limits the number of reporting periods for which you can claim a penalty waiver. Here are the maximum number of eligible periods based on how often you are required to report:

  • One annual
  • Two quarterly
  • Six monthly

If you have penalties for more periods, a Voluntary Disclosure Agreement may help you. Voluntary disclosure is when you freely come forward about back taxes you owe, and in return, the state agrees to only look back four years and to remove penalties when you pay the tax in full. You can only qualify for a voluntary disclosure if the state has not previously contacted you about the tax.

Penalty Waivers on Audits

If the state does an audit, it treats your account as if you have requested a penalty waiver. If you are subject to an audit, you do not need to request a penalty waiver. When you receive your determination, you will also find out if your penalties have been waived.

If you don't agree with the determination, you can request a redetermination hearing and go through the appeals process.

Waivers on Interest

In most cases, Texas will only waive penalties, but you can request an interest waiver as well. The state will generally only waive interest if any of the following apply:

  • An undue delay caused by comptroller personnel
  • Poor advice provided by the comptroller
  • A natural disaster

These rules apply if you apply for a penalty waiver on your own or if the state considers providing you with a waiver during an audit.

Appealing a Penalty Waiver Request

If your penalty waiver request is denied, you have 10 days to request an administrative appeal. You must appeal in writing — simply explain why you disagree and include any documents to support your case.

If the administrative appeal is denied, you can take additional steps. The state spells out your options in its denial letter.

Penalty Waivers for Property Taxes

You can request a waiver up to the 81st day after the delinquency date if you incur penalties due to a late property tax payment. Typically, the taxing authority has the discretion to accept or deny your request at its discretion, but it must waive penalties if one of the following situations apply:

  • The taxing authority caused the delinquency.
  • A qualifying religious organization acquired the property in the last year.
  • You tried to mail your payment on time, but the address changed since the last time you paid property taxes. 
  • Your mortgage copy doesn't keep your property tax payments in an escrow account, and they failed to send a copy of the property tax bill to you. 
  • You provided the taxing authority with your new address before September 1, but the agency sent the bill to the wrong address. 
  • Your electronic fund's transfer failed. 
  • The property was previously omitted from the appraisal roll. 
  • The carrier put the wrong postmark on your envelope, making your payment appear late. 

Get Help With Penalty Waivers in Texas

If you're struggling with unpaid taxes in Texas, you should reach out to a tax professional. They have experience dealing with the Texas Comptroller of Public Accounts, the Texas Department of Labor, and the Texas Workforce Commission, and they can help you negotiate with these agencies. To get help, contact a tax professional with experience in Texas penalty waivers today.

Disclaimer:  The content on this website is for educational purposes only. It does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.

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