Options to dispute IRS penalties

[Tax Sleuth]

I had asked the following question in a previous message. I'm trying to decide whether it might be worthwhile to bring my client's case to the Appeals Division of the IRS for further review, and I know this can be accomplished even if an Equivalent Hearing (EH) is not feasible. The time to request a CDP Hearing, the 30 day window, has already passed. However, I was wondering though if my client's case can be heard in the context of an EH if the facts are as follows:

Can penalties related to an overdue tax return that has been subsequently prepared and sent in to the IRS be legitimately disputed as part of an EH for a client if the client had received a Statutory Notice of Deficiency in the past in regards to that same overdue tax return? The client never responded to the Statutory Notice of Deficiency.

Please let me know, if anything, needs clarification in my question above. Thanks.

[Gary2]

I think you're wording things in a confusing way. Any penalty that might apply to a timely return could just as easily apply to an overdue return. So I'm assuming you don't mean some variety of penalties that happen to relate to this overdue return, but specifically the failure to file and failure to pay penalties.

I'm also assuming you don't specifically mean "dispute", as in "the IRS made a mistake in applying them", but rather get relief.

The 6651 late filing and late payment penalties can be waived if it's shown the delay was due to "reasonable cause and not willful neglect." Nothing in your description of circumstances suggests this would apply. Whether the IRS is willing to informally negotiate on such items outside the context of an OIC is beyond my experience - but I wouldn't bet on it, particularly as late in the process as you are now.

[DaveinTexas]

The penalties can be disputed but

I had asked the following question in a previous message. I'm trying to decide whether it might be worthwhile to bring my client's case to the Appeals Division of the IRS for further review, and I know this can be accomplished even if an Equivalent Hearing (EH) is not feasible. The time to request a CDP Hearing, the 30 day window, has already passed. However, I was wondering though if my client's case can be heard in the context of an EH if the facts are as follows:

Can penalties related to an overdue tax return that has been subsequently prepared and sent in to the IRS be legitimately disputed as part of an EH for a client if the client had received a Statutory Notice of Deficiency in the past in regards to that same overdue tax return? The client never responded to the Statutory Notice of Deficiency.

Please let me know, if anything, needs clarification in my question above. Thanks.

What the reasonable cause and can you prove the client acted in good faith in his/her efforts to file the return timely? I don't think you would have to request an EH unless you were disputing the principal balance or to stave off a lien/levy. I think I would try to contact PPS, the agent on the phone may be able to abate the penalty if the client has a clean record of timely filing. If not, then a very compelling letter may be the only way to ask for an abatement. Have you tried those remedies?

[New York Enrolled Agent]

Can penalties related to an overdue tax return that has been subsequently prepared and sent in to the IRS be legitimately disputed as part of an EH for a client if the client had received a Statutory Notice of Deficiency in the past in regards to that same overdue tax return? The client never responded to the Statutory Notice of Deficiency.

Please let me know, if anything, needs clarification in my question above. Thanks.

It's hard to answer your post without more facts. A taxpayer cannot simply ask for an equivalent hearing. They need to have a "ticket" to get into that hearing. The "ticket" comes from the issuance of a notice of federal tax lien (NFTL) or a notice of final intent to levy (a letter 1058 or CP90). Those tickets come with the ability to request a CDP hearing (must be timely within 30 days) or an EH (must be done within one year). You need to detail the collection activity that has taken place so far.

[taxea]

google: IRS Never Told Taxpayers They Could Get Penalty Relief