Substantial Tax Understatement Penalty? Acceptable Excuse?

[zeros]

Client failed to report substantial amount of income for last year. Hit with $4000 penalty. What is an acceptable reason for not paying it on time? He didn't get the 1099R so forgot to report it.

[geekgirldany]

Well, generally I would say he could not get it abated.... but read this post describing a recent case where taxpayers left off a W-2 and was able to have the penalty waived:

http://www.procedurallytaxing.com/omitted-income-accuracy-related-penalties-and-reasonable-cause/

https://www.ustaxcourt.gov/InOpHistoric/AndersenSummaryArmen.SUM.WPD.pdf

[Kram BergGold]

My opinion

I have never suceeded in writing a letter that got an ARP removed. Based on the article from the prior respondent I would say you have to go to court.

[taxea]

forgot they got the income???? they are required to report it with or without a 1099 issued. This is not a valid reason. Only suggestion would be one time waiver of penalty by IRS. If it was less than 25% of total income it may fly.