Tax Penalty Abatement Letter Request & Form 843

Tax Penalty Abatement Letter Request & Form 843
Below is a sample penalty abatement letter request to the IRS. It is intended to be used as a guide and is for information purposes only when trying to abate tax penalties.

Date:  September 20, 20xx

To:  IRS (Penalty Abatement)
(address given on notice of tax amount due)

From:  Jane Doe
123 Any Street
Any City, State 99999
SSN: (***-**-****)

Re: Request for Penalty Abatement

Dear Sir:

I am writing to request an abatement of penalty in the amount of $(amount) as assessed in the attached notice that is dated ____/____/____.

The reason why I _________(pick one)

• Paid late 
• Filed late 
• Failed to report income 

was because I ____________ (pick one) 

• Had a serious medical condition 
• House burned down 
• Documents were stolen 
• Death of a close family member 
• ...or any other reason that prevented you from complying with the IRS requirements 

Please find the enclosed (documents that support my claim) 

• Death notice of a family member 
• Letter from a doctor stating the conditions of your illness that prevented you from filing or paying 
• Picture of house burned down in fire 
• Insurance notice of theft of private property and documents 
• ...or any proof you can enclose (a copy of) to prove statement above 

Please consider my request for abatement of penalty based upon reasonable cause. If there are any questions or further information required, I can be reached at (telephone number) from 9am to 6pm. I have enclosed a payment in the amount of taxes owed, net of the penalty portion.

Sincerely,
/s/ Jane Doe

Editorial Note:

• If you have the funds to pay, you should pay the tax owed. 
• If you do not have the funds, you can apply for an Installment Agreement to pay back taxes owed over time or file an Offer-in-Compromise based upon reasonable collection potential (RCP).
• When enclosing your documents, be sure to keep copies for yourself.
• Review the penalty to determine:
• how and why it was assessed (late-file, late-pay and/or underreporting penalties), 
• what happened to create a situation for the taxpayer (TP) where a penalty was assessed (why the TP didn’t file or pay), and 
• whether the penalty abatement program would benefit the TP, and
• should TP apply for penalty abatement?
• For example, a TP who is Currently-Not-Collectible (CNC) would not benefit from penalty abatement; although, a first time abatement may be beneficial for someone who qualifies for CNC and has maxed out the 25% failure to pay penalty on their oldest tax year. 
• Abatements can be requested and authorized over the phone with ACS.
• More difficult to obtain are Reasonable Cause abatements. These abatements generally must be submitted on Form 843 and have well established reasonable cause criteria that must be met to qualify. File for these abatements at the end once a collection status has been resolved for the client.
• It will take a few months to get a response from the IRS, and whether the abatement is possible.  
• Reason for an abatement request cannot be illegal or a ‘protester’ argument. 
• When filing Form 843, know the IRS is the determining party. The TP will receive notice of acceptance or denial within three to six months. Any denial has appeal rights, so if the TP disagrees, the TP can respond to the IRS denial accordingly.
• IRM §20.1 contains the Penalty Abatement Handbook, which includes the reasonable cause standards.

Enc.