Penalty Abatement

What is an Abatement of an IRS Penalty?

If the IRS has assessed you a tax penalty, you may apply to have such a penalty abated, or reduced. To do so, you must file IRS Form 843.

Why would I apply for an abatement of penalty?

If you believe that the IRS erred, caused an unreasonable delay, or provided erroneous information in the course of assessing the penalty, or unlawfully assessed the penalty, you have the right to file for an abatement of the penalty. You also may file if you were assessed a penalty under section 6715 for the misuse of dyed fuel (untaxed diesel or kerosene used for off-road and agricultural purposes only). In all cases, you must document the error or delay you are claiming the IRS committed or caused. If you claim that the IRS erred, or provided erroneous information, you must document not only the IRS error, but your reliance on that error or erroneous information as well.

What if I have been assessed several penalties? May I file for an abatement of them all together?

The IRS specifies that a taxpayer must file for an abatement of each penalty assessed individually, using a separate Form 843.

May my tax preparer file for me, or must I file myself?

Your tax preparer may file Form 843 for you, but if the preparer does, he or she must also include the original or copy of IRS Form 2848, which you must sign and which authorizes your preparer with Power of Attorney.

What could cause the IRS to assess me a penalty?

If you claim a tax refund or credit an amount more than what the IRS allows for the tax year, the IRS may assess you a penalty of 20 percent of the difference between what you claimed and what the IRS allowed.

Do I Need an Attorney to Apply for Penalty Abatement?

While private individuals may apply for IRS penalty abatement, tax attorneys familiar with the process stand a better chance of abating your penalty. Just note what you want to achieve. It does not make sense to hire a lawyer for $500 to save you a $250 penalty.