In certain circumstances, the IRS allows for abatement of penalties.
Utilizing Form 843, Claim for Refund and Request for Abatement, to claim a refund or abatement of penalties assessed by the IRS. The IRS instructions to Form 843 list the instances where taxpayers should use this form.
Form 843 is not used to request an abatement of income, estate, or gift taxes.
Taxpayers in disagreement with an IRS notice assessing a penalty should follow the instructions provided in the notice to challenge the penalty. Filing of Form 843 may not be required.
The penalties listed by the IRS as eligible for relief include the following.
– Failure to file (FTF) a tax return
– Failure to pay (FTP) on time
– Failure to deposit certain taxes as required
– Other penalties as applicable
There are three specific types of penalty relief available. These are administrative waiver and first-time penalty abatement, reasonable cause, and statutory exception.
The most common administrative waiver is the first-time penalty abatement (FTPA) which started in FY2001. Only taxpayers who meet all the following conditions can qualify for FTPA relief.
- There was no previous tax return filing requirement, or the taxpayer had no penalties for the three tax years prior to the tax year of the FTPA penalty
- The taxpayer either filed all currently required returns or an extension of time to file
- The taxpayer paid, or arranged to pay, any tax due
Do you have any situations that n abatement would be of assistance? Call to discuss.