Penalty Abatement Letters

[TomJ]

Before I recreate the wheel, I searched TTB for Reasonable Cause penalty abatement and First Time Abatement hoping to find sample letters. I was unsuccessful, so I wanted to check with this forum to see if I missed them. Do samples exist on TTB (or anywhere else that you know of)? I understand the concepts and have links to IRS materials I can quote to draft my own, but again, hoping there's something standardized that others typically use as a starting point.

Thanks for any assistance.

[Roland Slugg]

If you will do a Google search under "tax penalty abatement letter sample" or "reasonable cause penalty abatement letter" or other similar wording, you will get many hits.

[Snaggletooth]

Your Own Creative Writing

Sorry it didn't work out. However, I disagree with the strategy of finding "canned responses" for your client's situation.

The best I would get out of a Google search might be a list of circumstances accepted by the IRS as being reasonable. Otherwise I would compose my own letter in my own words and explain why YOU believe the circumstances warrant a waiver of penalty.

Others will read my response and disagree. I have had a modicum of success running headlong into contentious areas with the IRS but will be the first to admit I have had shortfalls as well.

Regardless of how you approach it, I do wish you well on getting your client's penalty waived.

[commonstalk]

Tom,

I've had recent success, both on FTA and Reasonable Cause, in the past two months. The former was easy, just under 4k. I had one removed (Civil Penanlty just under 73k from 2011) and got another into Audit Recon., just under 23k from 2012.
I do use a couple of softwares that helped immeasurably, but I am concerned about posting them here. I don't want to take a chance on sparking the ire of TTB. You're very welcome to call at 703-909-1802.

[DaveinTexas]

Reason

The important thing to remember when receiving a negative IRS response disallowing the penalty abatement is the reason why they rejected the request. Also, keep in mind that if your FTA request is denied, then you have to rely on "reasonable cause" to request relief from the penalty; per the IRM.

TIP: Just because a taxpayer has timely filed in the past doesn't mean they will qualify for the FTA. They have another hoop to jump through and that is that "taxpayers must not have been assessed any other penalties of a “significant amount” on the same type of tax return within the past three years."

A "significant amount" is akin to "reasonable salary" which means it isn't defined but don't let an IRS agent (if you are doing this over the phone) tell you that the taxpayer doesn't qualify because 2 years ago they were assessed a FTP of $30. You have to use a bit of common sense when arguing these things.

And, search the IRM, specifically the penalty section, that is a valuable resource for what will "fly" and what won't when it comes to reasonable cause related to your specific case, etc.

I have a form letter, but it only has the basic information (IRS address in UT, AUR control number, CP2000 Response for Taxpayer Jim Smith, SSN XXX-XX-XXXX) so that won't help you.

What I have done is created 3 folders on my desktop. 1) Pending Penalty Abatement Letters, 2) Successful Penalty Abatement Letters and 3) Unsuccessful Penalty Abatement Letters. Then, in the Successful letters folder, I label each letter according to the type (FTA program letter, Accuracy Related Penalty letter, Late S Corp or Partnership Filing letter, Late Franchise Report filing letter (for the State), etc, etc).

Using this method, you can refer back to your "successful" requests and follow the similar verbiage of those letters to request penalty relief for future clients.

Good luck to you!