IRS Penalty Abatement Sample Letter

August 29, 2012 · 0 comments

in Hardship Letter

It’s no secret that the IRS doesn’t shy away from assessing penalties for every single offense that can be possibly thought up by the human imagination. While the IRS can be ruthless in assessing these penalties, many times, the IRS will not be sticklers about enforcing them. Dare I say they may even be somewhat reasonable about it, given plausible justification of the violation. The only way to know how committed the IRS is to charging you the assessed penalty is to ask them.

This may be easier said than done. You may sit down to pen a beautifully crafted letter and get as far as “Dear IRS” before your writer’s block makes a bold and unashamed appearance. Now what? Should you be forthcoming with details? What types of things are the IRS looking for? Is there a particular department you should be writing to or do you have a case worker you should contact? Do you need a doctor’s note or your hospital records? Do you need pictures of your damaged home from the hurricane or insurance records? Will the IRS be able to use any of your information to assess you further or worse yet, audit you?

Before you sit down to spend your valuable time on a letter to the IRS, take a moment to examine the pertinent details you intend to present to them to determine the feasibility of your request.

Did you file your return or pay your taxes on time and this is an error?

You should request a penalty abatement. Skip ahead to Sample Letter.

 

Were there circumstance outside of your control (i.e. car accident, serious illness, no access to your records, bad tax advice from a professional or the IRS) that prohibited you from filing returns or paying your taxes?

You should request a penalty abatement. Skip ahead to Sample Letter.

Were you too busy to hire someone to do your taxes or do them yourself? Did you expect to owe money to the IRS that you wouldn’t be able to pay so you put off the filing of your returns? Did you simply forget to file your returns?

These are not considered reasonable causes and your chances of obtaining a penalty abatement are slim.

You may have further questions about what the IRS would consider reasonable cause. Do not hesitate to contact a tax professional you trust to discuss these details. An Enrolled Agent is the highest credential the IRS bestows upon tax professionals. Find one that has no complaints and an A+ rating at the Better Business Bureau to further discuss your circumstances.

Below is a sample letter and breakdown of the components of a competent letter to the IRS about abating your penalties.

Sample Letter

 

January 1, 2012

 

 

 

Internal Revenue Service

Penalty Abatement Coordinator

Address

City, State, Zip

 

Re: Penalty Abatement

Ima Taxpayer

Address

City, State, Zip

SSN

Tax Year: 20??

Notice #

 

To Whom It May Concern:

 

I have been assessed a penalty in the amount of $2,345.67 (please refer to enclosed notice # for details).

 

The penalty was assessed for (insert offense here i.e. unfiled taxes, unpaid taxes, etc). I was unable to (insert proper action here i.e. file my returns, pay my taxes on time, etc.) due to (insert reason here i.e. disability, serious illness, etc.).

 

Describe the nature of your hardship here. For example, if you were disabled, include details such as the nature of your disability, the severity of your disability, and the dates of your disability.

 

Explain how your hardship prevented you from the proper action that the IRS is penalizing you for. Explain how other obligations were impaired (i.e. inability to pay other bills, inability to care for your children, etc.)

 

Please find enclosed documents to further explain my (insert hardship here).  The documents to enclose would be doctor’s notes, police reports, death certificate, pictures – anything to help the IRS agent fully understand your inability to file your returns or pay your taxes.

 

In light of the above information, I ask that you consider an abatement of my penalties for reasonable cause. If you have any further questions, I encourage you to contact me directly at (insert phone number here) or (insert email address here).

 

Thank you for your time and consideration. I look forward to your response.

 

Sincerely,

 

Sign your name in ink pen here

 

Type your name here

 

 

 

Other Things To Consider

Do you need to file your returns or pay your back taxes before submitting a request for penalty abatement to the IRS? A hardship isn’t black and white. Would your situation constitute a hardship? How can you tell if the IRS made a mistake on your assessments and therefore you’re due a penalty abatement? It would serve you well to speak with a reputable Enrolled Agent before sitting down at a desk to formulate your written plea to the IRS for a penalty abatement.

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