Penalty Abatement and Collections: Contesting IRS Assessments

Most tax professionals have experienced the complex process of mitigating penalties imposed on taxpayers and businesses by the Internal Revenue Service. This process is nebulous and begins when an IRS notice is received. The notice typically includes an additional assessment, along with penalties and interest. Deciding whether to attempt a resolution by phone, which may require a Power of Attorney, or in writing, a much slower process, is usually the first step toward a resolution.

Taxpayers may qualify for relief if they "exercised ordinary care and prudence" in filing their return and making the payment and they can demonstrate reasonable cause for their actions. The IRS states that reliance on a professional, for example, does not generally constitute reasonable cause, while death or a serious illness does.

Receipt of a Notice of Deficiency (90-day letter) allows taxpayers to petition the U.S. Tax Court. Small case procedures are in place for taxpayers owing $50,000 or less. Once received, taxpayers have 90 days from the date of the notice to file the petition. Sometimes, this may be the taxpayer's best or only option to resolve the deficiency. Tax professionals need to understand the avenues available for penalty relief and how to appropriately and expeditiously resolve outstanding balances for taxpayers.

Listen as our panel of federal tax controversy attorneys explains how to navigate IRS penalty abatement and collection procedures to garner the most favorable outcome.

I.                   Penalty abatement procedures

A.     Written requests

B.     Contesting penalty abatement through Tax Court petition

C.    Contesting penalty abatement through collection due process hearing

D.    Telephone requests

II.                 Substantive penalty abatement laws

A.     Applicable statutes

B.     Common grounds for reasonable cause abatement

1.     Severe illness or death

2.     Reliance on professional advice

3.     Financial hardship

4.     Recent developments with electronic filing failures

5.     Excuses not recognized

III.               Case building and factual development

A.     Interviewing client

B.     Preparing a narrative

C.    Gathering exhibits

The panel will cover these and other critical issues:

• Contesting penalty abatement by filing a Tax Court petition
• Contesting penalty abatement through a collection due process hearing
• Common grounds for reasonable cause abatement
• Case building and factual development

Learning Objectives

After completing this course you will be able to:

• Identify acceptable reasonable cause explanations for specific penalties
• Determine when a collection due process hearing can facilitate a resolution
• Decide how to build a case to withstand IRS challenges
• Ascertain when filing a Tax Court petition could be a taxpayer's best alternative

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

  
  

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).