Get Your IRS Penalty Waived – You Just Have To Ask

Because The IRS Won’t Offer Penalty Abatement Voluntarily

When requesting a IRS Penalty Waived in writing, provide any other relevant penalty relief arguments, including reasonable-cause arguments, to increase the client’s chances of having the penalty removed.

20.1.2.1.4.2 (07-02-2013): Notice 2013-24 Penalty Relief

A taxpayer may write in to request a IRS Penalty Waived based on relief granted under Notice 2013-24. The relief applies only to returns for tax periods ended 12/31/2012 or later, with a return due date before June 2013, without regard to extensions. This relief should be applied before applying “first time abate” (FTA) provisions.

This Notice provides transitional relief for additions to tax under section 6651(a)(2) of the Internal Revenue Code due to the delayed publication of some IRS forms relating to the 2012 tax year

On January 2, 2013, Congress enacted the American Taxpayer Relief Act of 2012 (ATRA), Pub. L. No. 112-240, 126 Stat. 2313. The ATRA affected a number of tax forms. Revising those forms required extensive programming and testing of IRS systems, which delayed the IRS’s ability to release, accept, and process those forms. These delays may affect the ability of some taxpayers to timely estimate and pay their 2012 tax liability when requesting an extension to file.

When responding to the assessment notice, a taxpayer should submit a letter describing the taxpayer’s eligibility for this relief, identifying which of the form(s) listed in Exhibit 1 of this Notice was included with the taxpayer’s return as filed, and referencing this Notice by number [Notice 2013-24] to the address listed in the assessment notice.

EXHIBIT 1 – Delayed 2012 forms (available in February 2013 or the first week of March 2013)

• Form 3800, General Business Credit
• Form 4136, Credit for Federal Tax Paid on Fuels
• Form 4562, Depreciation and Amortization (Including Information on Listed Property)
• Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands
• Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations
• Form 5695, Residential Energy Credits
• Form 5735, American Samoa Economic Development Credit
• Form 5884, Work Opportunity Credit
• Form 6478, Alcohol and Cellulosic Biofuels Credit
• Form 6765, Credit for Increasing Research Activities
• Form 8396, Mortgage Interest Credit
• Form 8582, Passive Activity Loss Limitations
• Form 8820, Orphan Drug Credit
• Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit
• Form 8839, Qualified Adoption Expenses
• Form 8844, Empowerment Zone and Renewal Community Employment Credit
• Form 8845, Indian Employment Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit
• Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
• Form 8864, Biodiesel and Renewable Diesel Fuels Credit
• Form 8874, New Markets Credits
• Form 8900, Qualified Railroad Track Maintenance Credit
• Form 8903, Domestic Production Activities Deduction
• Form 8908, Energy Efficient Home Credit
• Form 8909, Energy Efficient Appliance Credit
• Form 8910, Alternative Motor Vehicle Credit
• Form 8911, Alternative Fuel Vehicle Refueling Property Credit
• Form 8912, Credit to Holders of Tax Credit Bonds
• Form 8923, Mine Rescue Team Training Credit
• Form 8932, Credit for Employer Differential Wage Payments
• Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

In specific circumstances, the RCA requires the taxpayer to provide documentation to support his or her claim before the system determines penalty relief. The RCA will reach one of five possible conclusions for the MFT and the tax period reviewed (listed in order of priority):

Abate – reasonable cause established; remove penalty.

• Suspend – insufficient information; no conclusion reached.
• Sustain – reasonable cause not established.
• Mixed – abate one penalty/sustain the other.
• Other – not a reasonable cause issue. For example, a taxpayer disputes how the IRS computed a penalty.