Use Form 843 to request a refund or request a reduction in certain taxes, interest, penalties, fees and tax additions. Follow the instructions in the IRS notice you received. For help with a ticket, call the phone number listed on your notice or letter. If you didn't receive a letter or notice, use telephone support.
Compliance with the IRS tax return (file all taxes), correct the withholding (correct the W4 at work or making ES payments if you are self-employed). TLC is the easiest of all penalty relief options. You can request it by calling the toll-free number on your IRS notice, or your tax advisor can call the specific hotline for tax professionals or the compliance unit (if applicable) to apply for the FTA for any amount of penalty. Penalties for non-filing (FTF) and non-payment (FTP) generally require a reduction because the IRS evaluates them electronically (through its computer systems) when a return is filed or a transaction is made with the balance due.
You don't need to specify the reduction for the first time or provide supporting documents in your request for help. However, for two of the most common IRS penalties, you can get compensation if you follow a few simple rules for requesting and securing the reduction. These include penalties for accuracy or fraud and generally require the taxpayer to contact IRS auditors or appeals officers before evaluating the penalty. If no penalties are imposed in the previous 3 years, the IRS will grant the request for a reduction in the penalty.
When making the request over the phone, the IRS may simply tell you that you would need to make your request in writing, mailing the waiver application package. The IRS official will appreciate having an organized package, who will review your request. In the case of reducing the penalty for the first time, it's basically asking the IRS to simply forgive the penalty, without any reasonable cause. Forgiving the penalties will reduce the balance due and will make it much easier to pay the balance to the IRS.
If you owe penalties to the IRS for several years, you will have to file a different application for each year in which there is a penalty. You can also request the cancellation of the penalty after you have paid the full amount of taxes, penalties of 26% interest. Now that you've explained the reasons why the IRS would forgive the penalties, it's time to gather them all and apply. If you receive a denial of sentence letter that doesn't seem to address all of the facts and arguments presented in your request for sentence reduction, request an appeal of the determination.
The third thing you should do before asking the IRS to waive the penalty is to sign an installment agreement, such as the Fresh Start agreement, or pay the full balance due to the IRS.
