Page 165 Penalty Abatement Penalty abatement is like fishing. It is about patience, persistence, and procedure and the answer always seems to be just out of reach 07: Penalty Abatement

Page 165 Penalty Abatement The bible of penalty relief is Part 20 of the IRM To access the IRS go to irs.gov/irm 07: Penalty Abatement

Page 165 Penalty Abatement Type Here 07: Penalty Abatement

Page 165 Penalty Abatement Taxpayers have the right to challenge the assertion or assessment of a penalty, and generally may do so at any stage in the penalty process. Taxpayers may request: A review of the penalty prior to assessment (e.g. deficiency procedures), A penalty abatement after it is assessed and either before or after it's paid (post-assessment review), An abatement and refund after payment (claim for refund – Form 843). 07: Penalty Abatement

Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4 Page 165 -166 Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4 07: Penalty Abatement

Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4 Page 165 -166 Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4 07: Penalty Abatement

Penalty Abatement The IRM on penalties will provide: Page 166 Penalty Abatement The IRM on penalties will provide: A summary description of the penalty and the associated penalty amounts. The criteria for the relief from a penalty if available (see table on prior two slides) IRM 20.1.1.3.2.1 Standards and Authorities for Reasonable Cause Page 169 07: Penalty Abatement

Page 167-169 Reasonable Cause When requesting abatement for reasonable cause the primary determination will be “exercised ordinary business care and prudence”: The taxpayer did the best they could but still failed. 07: Penalty Abatement

Page 168 Reasonable Cause Telling the story: 07: Penalty Abatement

Reasonable Cause Remember the following: Page 169 Reasonable Cause Remember the following: It requires no special training or effort to determine a deadline – Long involved stories will not get you to the promised land. It does not work to blame somebody else – Reliance on an agent excuses will fail. The relationship and the responsibility is between the taxpayer and nobody else 07: Penalty Abatement

Ordinary Business Care and Prudence Page 170 Ordinary Business Care and Prudence 07: Penalty Abatement

Ordinary Business Care and Prudence Page 170 Ordinary Business Care and Prudence 07: Penalty Abatement

The Disasters Not of the taxpayer’s making: Page 171-175 The Disasters Not of the taxpayer’s making: IRM 20.1.1.3.2.2.1 – Death, Serious, Illness, or Unavoidable – Taxpayer and their immediate family – Page 171 IRM 20.1.1.3.2.2.2 – Fire, Casualty, Natural Disaster, or Other Disturbance – Reasonable Cause – Demonstrate they are an “Affected Person” – Page 171-172 IRM 20.1.1.3.2.2.3 – Unable to Obtain Records – Why not available, why they were needed and what the taxpayer did to recover them. – Page 172-173 07: Penalty Abatement

The Disasters Not of the taxpayer’s making: Page 171-175 The Disasters Not of the taxpayer’s making: 20.1.1.3.2.2.4 – Mistake was made – Very difficult as may demonstrate lack of care. – Page 173 20.1.1.3.2.2.5 – Erroneous Advice – It was reasonable for the taxpayer to rely on the advice. - Page 173-174 20.1.1.3.2.2.6 – Ignorance of the Law – The taxpayer made every effort but was still not aware. – Page 174-175 07: Penalty Abatement

The Disasters Not of the taxpayer’s making: Page 171-175 The Disasters Not of the taxpayer’s making: 20.1.1.3.2.2.7 – Forgetfulness – Requires that the taxpayer had reasonable basis for forgetting the deadline, i.e. diminished mental capacity. – Page 175 07: Penalty Abatement

Page 175-176 Success and Failure The Boyle Case - U.S. v. Boyle, Robert, (1983, CA7) 52 AFTR 2d 83-6419 IRS while assessing penalties based on business rules will in fact abate penalties on a case by case basis Make the case that your taxpayer is special and eligible for special treatment – Look for other examples that are similar to your case where relief was granted. 07: Penalty Abatement

How to Request and Abatement Page 176 How to Request and Abatement When: – IRS says not until notice received But as quickly as possible when receiving the notice asserting the penalty As a general observation the longer the time period between IRS asserting the penalty and request for relief the less likely a favorable abatement determination 07: Penalty Abatement

How to Request and Abatement Page 176 How to Request and Abatement Other Opportunities File Form 843 – Denial presents an appeal right and IRS must act upon within six months File claim in District Court or Court of Federal Claims Wait for CDP rights notice and make case before appeals officer at CDP hearing OIC – Doubt as to Liability Taxpayer Assistance Order – Form 911 to TA 07: Penalty Abatement

Page 183 Penalty Abatement In today’s environment penalty abatement has become more difficult and success goes to those who are persistent, patient and follow procedure 07: Penalty Abatement