Penalty Abatement, Please 

Posted on by Lewis

I hope you have managed to stay safe and well! We focus on resolving tax issues in Prince William County and throughout the lower Northern Virginia area.

We talk frequently about requesting from the Internal Revenue Service (IRS), penalty abatement for past tax obligations. If you’re wondering about how to do such a thing without waiting an interminable amount of time on the phone (if your call is answered at all).  Here is an example of some of the language to use in your correspondence to the IRS in regards to a failure to file penalty assessment in error.

We, Mr and Mrs TAXPAYER are in receipt of the 20xx account transcript you sent. We respectfully request removal of the failure to file penalty, as it was improperly imposed by the Internal Revenue Service (“IRS”). The taxpayers, via USPS mail, filed an extension of time to file the return until October 15, 20xx and included full payment for their 20xx taxes with the request.

  1. Enclosed herewith is a copy of the check dated April 15, 20xx and processed by the IRS

on May 3, 20xx for their 20xx taxes (this represents the amount paid with the extension to file

from Schedule x / Line xx from their Form 1040). Based on the account transcript, it appears the

IRS might have lost the extension request when they processed the payment. 

  • Between the check payment for $1,990,000.00 and the credit from a prior year that the taxpayers applied to their 20xx return, there was no tax due. Under IRC Section 6651(b), the failure to file penalty is imposed on the net amount due. Pursuant to IRC Section 6651(b), “the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return.” Here, the IRS received the check that was mailed on April 15, 20xx and processed on May 3, 20xx.

If ever you’re feeling overburdened by your tax situation or you’d rather be doing something else with your time, just remember we’re here to help you with all of your tax preparation, resolution/representation needs.  Now and in the future. Don’t put off addressing your tax situation. Feel free to contact us with any questions you may have in approaching your specific tax scenario.