I have a client who has alzheimers and did not file his 2004 return. He was assessed fines and penalties. I would like to try and get an abatement of the penalties. Can I send in a statement explaining the situation or due I need to fill out Form 843? It seems Form 843 is mostly used for businesses trying to abate penaltes.
-
-
Write a letter and try to state your client's case clearly, and ask the Service to abate the penalties. It helps to be contrite. If he was diagnosed with Alzheimer's back in 2004 you may even want to attach a note from his physician. -
Who's Asking?
The problem you have is determining who should make the request. If the client is incapacitated, then it doesn't make much sense to have him sign it. Does someone have his power of attorney that authorized dealing with tax matters?
I believe there is some requirement that penalty abatement requests be made "under penalty of perjury." This is how I close letters that I write for my clients to sign:
>>Thank you for your consideration of this request. The statements contained in it are complete and correct, and made under penalty of perjury.<<
My philosophy is that IRS is more likely to look favorably on a letter from the taxpayer, rather than one from a practitioner. But sometimes I will write and sign the letter, and then have the client sign it below my signature, with the following additional language:
>>Under penalty of perjury, I/we verify that we have read the foregoing and that the facts set forth above are complete and correct.<<
My experience is that it doesn't take much to get IRS to abate penalties, at least for first-time offenders. But they do expect the interest to be paid and on occasion they have asked for that before moving on to the penalty abatement, so I try to make sure that the interest is paid first. That can be difficult to figure, since interest is assessed on the penalties also, and it's not certain what date the check will be cashed, so I advise clients to overpay by $5 or $10 and then hope for a refund.Comment
-
From IRS penalty handbook
"In the interest of fairness, the Service will consider requests for penalty relief received from third parties, including requests from representatives without an authorized power of attorney. While information may be accepted, NO taxpayer information may be discussed with a third party, unless a power of attorney or other acceptable authorization is secured in writing from the taxpayer. See LEM 20.1..3."Comment
-
Typical IRS Ambivalence
However, the IRM later states:
20.1.1.4.1.2 (08-20-1998)
Postassessment Appeals
To request abatement of a penalty after assessment, the taxpayer must submit a written request to the Service.
The employee must consider all the facts and circumstances to determine if the taxpayer’s explanation meets the penalty relief criteria. See IRM 20.1.1.3.
If a taxpayer orally request the abatement of a penalty, advise the taxpayer to submit the request in writing.
If a taxpayer orally requests an appeal of a decision, advise the taxpayer to submit the request in writing.
Certain penalties such as failure to file, failure to pay, and failure to deposit are routinely assessed at the time a return is filed or the tax is paid. When one of these penalties is assessed, the taxpayer may submit a statement requesting an abatement of the penalty.Comment
-
ambivalence
>>The employee must consider all the facts and circumstances to determine if the taxpayer’s explanation meets the penalty relief criteria<<
I don't see the "ambivalence." IRS seems very open to penalty abatement, especially for penalties that are assessed automatically. They don't even much care who writes it, as long as they get something they can put in a file somewhere.
Notice the reference to "facts and circumstances." You can't just beg pretty please--you have to have some kind of half-baked excuse. In the original post, the debilitating mental deterioration is undoubtedly reasonable cause (unless the onset was in late 2005 or there was a court-appointed guardian or something). An often-overlooked element of reasonable cause is an explanation of how the error has been corrected and why it will not happen again.Comment
-
The penalty handbook
should be a part of every practioner's library. Nothing can make you look better than penalty abatement. Unless it's fixing turbotrash.Comment
-
Where can I get
the Penalty Handbook? Is it included in the standard online research products such as Kleinrock or RIA?Comment
-
This is so true. But I think even better is going to an audit for a taxpayer that another preparer messed up and reducing the tax owing. If you can do that then you have a client for life.
Say Veritas how is it going down there in the land of Liberals and Nike?
How is the Financial stuff going, still plugging away at it?Comment
-
The Penalty Handbook
...can be found at the following link.
Comment
-
Thanks
for all of the good responses. I'm going to write the letter and attach the documentation from his doctors.Comment
-
I voted for Ronald Reagan,
I knew Ronald Regan. Arnold is not Ronald Reagan.Comment
Comment