Abatement of penalties or interest 
8/21/04
- Collection Options:
- extension up to 120 days to pay taxes in full
- currently not collectible (hardship) status – delay collection until financial condition improves
- installment payments
- bankruptcy
- expiration of Statute of limitations
- offer in compromise – settle for less than full payment
- See also: collection standards
- financial Information forms
- collection due process hearing right
- IRS Taxpayer Advocate Service (TAS)
- IRS Form 911 – Request for Taxpayer Advocate Service Assistance/ hardship relief
- Low Income Taxpayer Clinic (LITC)
- determining the correct tax
- audits / recordkeeping
- IRS correspondence audits
- notice of deficiency
- Tax Court
- what if you haven't filed returns
- trust fund recovery penalty
- what if you can't pay your taxes
- what if my spouse owes taxes but I don't
- can I really settle for pennies on the dollar ?
- innocent spouse relief
- injured spouse relief
- tax liens & levies
- subordination of lien
- can the IRS take my house
- abatement of penalties
- discharge of property from lien
- subordination of IRS lien, e.g., to refinancing
- bankruptcy doesn't remove a tax lien even after the tax is discharged
- trust fund recovery (responsible person) penalty
- private party (non-IRS) debt collectors
- tenancy by the entirety protections US v. Craft
Interest represents the "time value of money", i.e., the cost of not paying when due. The IRS can only abate interest for "undue ministerial delay". This does not include for example instances where the assigned IRS employee is gone for weeks in training or on vacation, but only "unusual" circumstances, e.g., the file was "lost behind the file cabinet" for an extended time.
Penalties can be abated based on "reasonable cause" under the "facts and circumstances" – e.g., whether you acted like a "reasonable person" would have acted in the circumstances to take care of your obligations (e.g., filing or paying), and whether imposing a penalty would not have had an impact in encouraging you to comply.
Favorable factors include:
- matters beyond your control that prevented your compliance;
- it was a first time error or failure to comply;
- you have otherwise been a compliant taxpayer and
- you acted promptly to correct the non-compliance when it became possible.
Sometimes the IRS requires the taxes, penalty and interest be paid in full before it will consider a request to abate penalties.