1. 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
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2. Page 165
Penalty Abatement
The bible of penalty relief is Part 20 of the IRM To access the IRS go to irs.gov/irm
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3. Page 165
Penalty Abatement
Type Here
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4. 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

5. Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4
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Penalty Abatement
IRM Look at the bottom of
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6. Penalty Abatement IRM 20.1.1.3 Look at the bottom of 20.1.1.5.4
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Penalty Abatement
IRM Look at the bottom of
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7. Penalty Abatement The IRM on penalties will provide:
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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 Standards and Authorities for Reasonable Cause
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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.
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Reasonable Cause
Telling the story:
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10. Reasonable Cause Remember the following:
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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
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11. Ordinary Business Care and Prudence
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Ordinary Business Care and Prudence
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12. Ordinary Business Care and Prudence
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Ordinary Business Care and Prudence
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13. The Disasters Not of the taxpayer’s making:
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The Disasters
Not of the taxpayer’s making:
IRM – Death, Serious, Illness, or Unavoidable – Taxpayer and their immediate family – Page 171
IRM – Fire, Casualty, Natural Disaster, or Other Disturbance – Reasonable Cause – Demonstrate they are an “Affected Person” – Page
IRM – Unable to Obtain Records – Why not available, why they were needed and what the taxpayer did to recover them. – Page
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14. The Disasters Not of the taxpayer’s making:
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The Disasters
Not of the taxpayer’s making:
– Mistake was made – Very difficult as may demonstrate lack of care. – Page 173
– Erroneous Advice – It was reasonable for the taxpayer to rely on the advice. - Page
– Ignorance of the Law – The taxpayer made every effort but was still not aware. – Page
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15. The Disasters Not of the taxpayer’s making:
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The Disasters
Not of the taxpayer’s making:
– Forgetfulness – Requires that the taxpayer had reasonable basis for forgetting the deadline, i.e. diminished mental capacity. – Page 175
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Success and Failure
The Boyle Case - U.S. v. Boyle, Robert, (1983, CA7) 52 AFTR 2d 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.
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17. How to Request and Abatement
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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
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18. How to Request and Abatement
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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
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19. 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