Write a letter requesting a reduction for reasonable cause, or submit Form 843, Request for Refund and Request for Reduction. The IRS decision usually takes three to four months. After submitting the penalty reduction request to the IRS, the IRS will generally send a letter within 2 to 4 months. This will allow the taxpayer to know if the IRS accepted or rejected the request for a reduction in the penalty.
If the IRS accepts the request for a reduction in the penalty, the process will be completed. However, if the IRS denies the request, additional steps must be taken to continue the search for a reduction in the penalty. Once again, one of the most important measures is to ensure that the circumstances surrounding the case qualify for the reduction of the sentence, so that months are not spent on something that was never possible in the first place. When an IRS compliance unit evaluates the penalty, it won't work to request an FTA from a PPS representative or through electronic services.
If the taxpayer requests relief for penalties imposed over two or more tax periods, the TLC criteria may apply to the earliest tax period, as long as the taxpayer meets the clean penalty record criteria for the three tax years prior to the earliest tax period. However, the memorandum explains, delegated authorities do not prevent the TAS from making specific recommendations to the IRS to reduce penalties. It's safe to assume that most taxpayers don't like paying taxes and hate paying IRS penalties, especially when the penalties seem unfair. IRS appeals officers can partially settle the penalty or not allow it in full, but allow a reduction (a percentage or for certain years in cases where several years are requested).
If the IRS employee overrides the RCA, they can make a decision based on whether the taxpayer's facts meet the clear criteria for qualifying for the FTA. When you have an outstanding tax bill, the IRS allows you to request a due process of collection (CDP) hearing and, during this hearing, you can present your case directly to an IRS agent. The IRS requires its employees to use this program to make decisions on requests for penalty relief, including TLC requests. In addition, IRS computers automatically deny most initial requests and most taxpayers don't appeal their denials.
The customer to whom the IRS grants a TLC will receive the letter 3502C or 3503C 30 for the reduction of the individual penalty for non-presentation and payment, and the letter 168C (or its equivalent) 31 for the reduction of the penalty for lack of business deposit. However, if the case is being handled by a local IRS office, the taxpayer may have to deal directly with that office. Before taking up his current position, Jim's consultancy focused on the areas of tax controversy and tax administration, including leading the development of software products on tax issues for tax professionals, testifying before Congress, advocating for the transparency and efficiency of the IRS, and proposing innovative solutions on a large scale for taxpayers and tax professionals. Remind the IRS that, while the FTA does not apply, the customer has a clean record of compliance, except for one incident of non-compliance.