Request for Abatement Due to Bad Written IRS Advice
If you received incorrect written advice from an IRS employee, you can ask for an abatement. See IRM 20.1.1.3.3.4.1. Specifically, this is a request to the IRS to erase penalties, interest, or additional tax. Abatements based on bad written advice are rarely a success. As a result, they are rarely seen. Also noteworthy is the fact that the IRS does not provide advice in a written format often.
Your situation must meet these criteria:
- You asked for advice from the IRS
- You relied on the written advice
- The bad advice was not related to inadequate or inaccurate information from you
To request an abatement, you need to complete Form 843. Moreover, fill out the correct box in section 5a. You can read more about it here.
Make sure to list the dates and amounts of any payments you made toward the penalty and taxes. Also, include these supporting docs:
- A copy of your written request for advice to the IRS
- A copy of the bad written advice you received from the IRS
- The report of tax adjustments showing the penalty or addition to tax
- Any other items relating to the advice from the IRS
Abating Penalties Due to Bad Oral Advice
The IRS’s IRM does state that penalty relief is available for bad oral advice (see IRM 20.1.1.3.3.4.2 ). However, like written advice, many licensed tax pros do not request abatement based on erroneous oral advice. Therefore, it is rarely approved. Furthermore, the IRS provides abatements for incorrect oral advice administratively.
Here are some factors the IRS will consider:
- Were ordinary business care and prudence in relying on the IRS’s advice exercised?
- Does a clear link exist between your situation, the tax advice given, and the penalty assessed?
- What’s your prior tax history? Prior experience with the tax requirements?
- Did the IRS provide correct info in other ways (forms, publications, etc)?
- What type of supporting docs do you have?
The IRS considers documents supportive if:
- They include a notation of your questions to the IRS
- Docs regarding advice provided by the IRS
- How the taxpayer obtained the information? Moreover, which IRS office gave it?
- The date of the advice
- Which IRS employee gave the advice?