What Is Typically Included in an IRS Letter for Penalty Abatement?


Quick Answer

An IRS letter for penalty abatement contains a statement of facts, statement of law, an analysis section, and a conclusion that directly and specifically requests the penalty waiver, according to Ayar Law Group. It also includes relevant information such as the taxpayer's name and identification number, tax period, penalty type and amount, and copies of documents that prove compliance history, in the case of a first-time abatement, says the American Institute of Certified Public Accountants.

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Full Answer

The taxpayer must write a brief explanation of the facts and of the circumstances that show the reasons for requesting a reasonable-cause waiver. It also helps to cite the relevant Internal Revenue Manual codes. The analysis section illustrates how the facts and circumstances fall under the IRM codes already quoted, and it does not introduce new information. The letter should also expressly request for the penalty waiver in its conclusion section, reports Ayar Law Group.

The Internal Revenue Service can grant a penalty abatement on grounds such as statutory exceptions, reasonable cause, correction of a service error, and an administrative waiver. A first-time abatement is an administrative waiver, notes Ayar Law Group. To qualify for a first-time abatement, the taxpayer must have filed all the required returns, paid or arranged to pay all taxes due, and must have a clean penalty history, adds the American Institute of CPAs.

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