How To Request Abatement of Civil Penalties for Reasonable Cause
Taxpayers have the right to challenge the assertion or assessment of a penalty, and generally may do so at any stage in the penalty process. Taxpayers may request:
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A review of the penalty prior to assessment (e.g., deficiency procedures)
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A penalty abatement after it is assessed and either before or after it is paid (post-assessment review), or
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An abatement and refund after payment - claim for refund Form 843. Taxpayers may indicate their disagreement with IRS verbally, in writing, or if paid, by filing a claim for refund (IRS Form 843) or credit.
If agreement cannot be reached at the district or service center, the taxpayer may request a conference with the employee's immediate manager or in most cases the taxpayer may request that the case be forwarded to appeals. Taxpayers should provide a written request for consideration by appeals.
The taxpayer may also file suit in court. Depending on the procedural circumstances of the taxpayer's case, the taxpayer may petition the Tax Court or file a complaint with either the district court having jurisdiction or the Court of Federal Claims, as appropriate. (Internal Revenue Manual)
To request abatement of a penalty after assessment, the taxpayer must submit a written request to IRS. (Internal Revenue Manual)
Appeals officers have the authority to resolve appeals of assessed penalties. In order to expedite processing, each service center has a penalty appeal coordinator. Appeals officers should generally dispose of small penalty cases (resources permitting) within 90 days of receipt of the written protest and file from the service center or district office. Large penalty cases, or cases with more complex issues, could take additional time to complete. (Internal Revenue Manual) Internet access to the Internal Revenue Manual is: http://www.irs.gov/irm