When dealing with an IRS penalty, it’s quite often the quickest approach to request penalty relief by phone. If you receive a IRS notice or are making your first tax abatement, or for basic reasonable cause, please contact the toll free number on your IRS notice or call the IRS main line at 1-800-829-1040.

How the IRS Penalty Relief by Phone Request Works

    1. Prepare your information
    2. Contact the IRS
    3. Ask the agent
    4. Verbal processing

Criteria for Relief

Best Practices for Calling

  • Timing
  • Documentation
  • Follow-up

Can You Request IRS Penalty Relief by Phone?

Yes. A penalty abatement by phone can be effective in simple cases where you’ve been notified of a penalty by the IRS in a letter or notice and the penalty is easily reviewed by the IRS. This can involve a request for IRS late filing penalty relief, IRS late payment penalty relief or a phone request for first time penalty abatement with the IRS.

The IRS phone agent might require the following information during the call:

What Is IRS Penalty Relief?

From the standpoint of Advocate Shahid (Tax Strategy and Advisory Specialist). The IRS penalty relief is when IRS may waive, lower, cancel or abate tax penalties, if you meet the IRS penalty relief requirements. Often, taxpayers refer to this as IRS penalty forgiveness, IRS penalty cancellation, tax penalty abatement or IRS penalty waiver, but technically it is “penalty abatement.

There is no such thing as one IRS Penalty Relief Program. It is more commonly known as relief options such as administrative penalty, first time abate, automatic exemption from penalty, reasonable cause and statutory exception. The choice of the best option depends on the nature of the penalty, your record of tax compliance and the circumstances of the late filing, late payment, or missed tax deposit.

IRS Penalty Relief Phone Request Process (Step-by-Step)

1: Call the Number on Your Notice

Call IRS’s toll-free number listed in the notice or letter. This is typically better than looking on Google for a general number.

2: Verify Your Identity

Expect questions relating to identity and accounts. Before discussing the IRS penalty, the IRS will require you to prove your identity.

3: Identify the Exact Penalty

Identify the tax year, notice number, type of penalty and amount of the penalty. This assists the agent to review the proper penalty reason code and the account period.

4: Ask for the Best Relief Option

Determine if you are eligible for Automatic Exemption from Penalty, first time abate, reasonable cause, statutory exception or administrative waiver. This is the heart and soul of the penalty relief process by the IRS.

5: Explain Your Reason Clearly

Give a brief explanation:

A notice is issued indicating that I owe a penalty for tax year [year] and I want to have the penalty abated because [reason]. I believe I am eligible for the abatement because I have a good compliance history, there is reasonable cause, I feel that it was an IRS error, or it is a statutory exception. “May this be considered for a reduction in penalties over the phone?”

6: Ask for the Decision

Just before the end of the call, discuss with the caller if their request has been approved or declined, what penalties have been removed, if they will be having an interest adjustment, if they will be receiving an abatement letter, and what they should do if the penalty still shows up.

7: Ask About Written Relief if Needed

If the IRS is unable to grant the request over the phone, inquire if you should submit Form 843 or other IRS written request for relief from penalties. Obtain proper mailing address and the deadline.

What Penalties Can the IRS Remove or Reduce?

Failure to file, failure to pay and failure to deposit penalties are the most common types of penalty relief requests. Everyone can benefit from IRS penalty relief after filing late and businesses can benefit from payroll tax relief after the payroll tax filing deadline.

Failure to File Penalty

Failure to file penalty applies to failure to file required return. If you qualify for any category of IRS relief, such as first time abatement, reasonable cause, you can file a request with the IRS to remove a late filing penalty. A taxpayer’s explanation of why he or she filed after the deadline, along with medical records if necessary, can be submitted if he or she missed the deadline due to a serious illness.

Failure to Pay Penalty

Failure to pay penalty means that the tax hasn’t been paid on time. Making the payments that you can and making an installment agreement may help minimize penalty growth in the future if you can’t afford to pay the full amount. It is significant for anyone who wishes to get IRS penalty relief for the tax debt as since penalty relief doesn’t eliminate the tax balance.

Failure to Deposit Penalty

Failure to deposit on time, insufficient or incorrect deposits can lead to a failure to deposit penalty for businesses that have payroll tax responsibilities. There are cases that are more sensitive as payroll taxes require employment tax compliance. Business tax penalty abatement, payroll tax penalty relief and professional tax penalty help are all available for a small business that has made an error with an EFTPS.

Other Penalties

Special rules for estimated tax penalties, accuracy-related penalties, information return penalties and some statutory penalties. Some of the answers can be disputed for reasonable cause and good faith and some answers may need a more technical written explanation.

Main IRS Penalty Relief Options

Automatic Exemption from Penalty

AEP (Automatic Exemption from Penalty) is an administrative relief method from the IRS that is new. It can be applied automatically as a result of a taxpayer’s IRS filings, where no other issues have been detected in the preceding years. Those taxpayers who are still looking for abatements or penalty forgiveness, should know that AEP is intended to offer them a comparable relief in eligible circumstances.

First Time Abate and Administrative Relief

One of the most popular IRS administrative penalty relief programs is one you may have heard of: first time abatement. It can be used in cases of a relatively good track record of compliance and the penalty is your first in several years. When contacting the IRS, you can request that they state: “Will I qualify for first time abate or administrative penalty relief because of my IRS Tax Compliance History.”

Reasonable Cause Penalty Relief

Reasonable cause penalty relief is granted where you took reasonable care and prudence in your business but failed to file, pay or deposit when due. Common cases include a serious illness, family member’s death, natural disaster, unavoidable absences, lost records and IRS mistakes.

A reasonable cause statement should include an explanation of what occurred, when it occurred, how it prevented compliance in a timely fashion and what you did to remedy the situation as soon as possible. Facts and supporting evidence are important. “Forget” is typically a weak verb. “From March 20 to April 25 I was hospitalized and filed immediately upon my recovery is much stronger.

Statutory Exception

There may be an exception under the tax law or IRS regulations. This can include using erroneous written IRS guidance, when to file, federally declared disaster assistance, or any other exceptions. If you think the IRS incorrectly imposed a penalty, request an IRS account review and provide details on the penalty that you believe is incorrect.

What to Do Before Calling the IRS

Read the IRS notice carefully prior to making a phone call to IRS for penalty relief. See the notice number, tax year, type of penalty, amount to be paid, due date for the response, phone number and appeal rights. Common notices may include CP14, CP501, CP503, or CP504.

Now collect your IRS penalty relief paperwork. This could be either:

What to Say When Calling IRS for Penalty Relief

Let’s look at a realistic telephone conversation:

I’ve just gotten a letter from the IRS stating that I owe a penalty for tax year [year] for [failure to file, failure to pay, failure to deposit]. I think I’m eligible to have my IRS penalty abated because [reason].” May I check if I am eligible for 1st time abatement, Automatic Exemption from Penalty or reasonable cause exemption from a penalty?”

If you have a clean record, you should respond “I have paid and filed on time in the past and I want to know if I qualify due to good compliance history.

If the IRS mistakes, state: “I think this is an incorrect IRS penalty as I paid it on time, I have proof of payment and I would like to have my account corrected.

Real-Life Examples

Medical Emergency

A taxpayer underwent surgery just prior to the tax filing deadline and was late. They were given a “Failure to File Penalty”. In this case, IRS penalty relief following IRS notice could begin with a telephone request, and medical documentation if IRS requires documentation.

Clean Compliance History

Once a taxpayer paid late following a number of years of filing and paying on time. First question is if it’s a first time abatement or if it’s an Automatic Exemption from Penalty.

Payroll Deposit Mistake

A small business owner has deposited a Payroll tax to the wrong period in EFTPS. The owner should collect the receipts and ask the account for the correction and/or the cancellation of the penalty. However, if the problems are more serious with payroll, then you might need a payroll tax penalty lawyer.

Tax Preparer Error

However, when a preparer fails to meet the deadline the IRS may not automatically find that to be reasonable cause. United States v. Boyle is frequently quoted to support the notion that the tax laws impose filing requirements on taxpayers. In some technical tax advice situations though, the reliance of a professional expert may be acceptable if the taxpayer relied on the advice reasonably and good faithfully.

Fees, Penalties, Timelines, and Costs

The IRS typically does not have an application fee for filing for penalty relief by telephone. Interest, penalties not removed from the account and unpaid tax may accrue until the account is resolved.

Timelines vary. There may be a delay in getting the accounts updated despite a phone approval, and the phone approval may be represented prior to a written Form 843 request. More complex business tax cases or requests, appeals, take longer.

The fees charged by the professional will be dependent on the case. An IRS penalty relief consultation can be less expensive than an IRS penalty appeal or multi-year IRS tax resolution. Penalties typically will vary based on the amount of the penalty, the number of tax years, whether IRS collections are pending and if a written argument needs to be submitted.

Common Mistakes to Avoid

Avoid calling, without reading the notice. Never seek “forgiveness” generically; without specifying the kind of relief. Don’t forget to pay the balance of taxes. Be aware that the IRS won’t waive interest due on unpaid taxes! If the IRS did not grant relief from penalties, be sure to appeal in a timely fashion.

Another common error is to provide an inadequate explanation. “forgot” is not the solution. Explain the facts to the delay and what you did to meet the requirements to comply as early as possible.

Common Problems and Solutions

In the event that the IRS indicated that you are not eligible for first time abate, inquire as to whether AEP, reasonable cause, or statutory exception apply. When asked to submit Form 843 by the IRS, make a neat written statement that has all supporting documents.

Once you have abated the penalty, look at your IRS account transcript and request to correct your account. If the IRS eliminated the penalty, but interest is still being charged, inquire if the interest is for the deleted penalty or unpaid tax. If a payment is made in the incorrect tax year, submit bank records and/or IRS payment confirmation.

Call again if the IRS call fails, or wait times are too long; make a log of all calls made and submit a written request if time is running out.

When to Hire a Tax Lawyer, CPA, or Enrolled Agent

For cases where it’s simple, you may contact the IRS directly. Seeking professional assistance is worthwhile where penalties are high, multiple tax years are affected, payroll tax penalties are in issue, IRS denied relief, collections have initiated and/or a penalty appeal is needed.

With an IRS Form 2848, a tax attorney, a CPA or an enrolled agent may reach out to the IRS. It will be particularly helpful if you require legal tax services, a reasonable cause letter, Form 843 preparation, IRS notice response service or IRS penalty abatement services.

Official IRS Guidance

Use the phone number on your IRS notice. Use IRS.gov to get official forms and instructions, such as IRS.gov penalty relief, reasonable cause, administrative penalty relief, Form 843 instructions, payment plan page, IRS Online Account and Taxpayer Advocate Service (TAS) for serious unresolved hardship.

Maintain a call log that includes date, phone number, agent information (if given), call summary, decision and next steps.

FAQs

Can I request IRS penalty relief by phone?

Yes. You can call the IRS on the number provided on your IRS notice/letter for some IRS penalty relief requests.

Can the IRS remove penalties over the phone?

Yes, in some cases. As of yet, the IRS is unable to grant relief by phone and may require Form 843 or a written statement.

What number do I call for IRS penalty relief?

Call the number that is listed in the IRS notice or letter that is calling.

What do I say when calling IRS for penalty abatement?

Determine the penalties, tax year and reason. Check to see if you are eligible for First Time Abatement, AEP, Reasonable Cause or Statutory Exception.

Do I need Form 843 for penalty relief?

Sometimes. Form 843 is more frequently used in situations where it is not possible to obtain approval by phone or there is a written explanation for the facts.

Can I request penalty relief if I still owe tax?

Yes, but in no way will penalty relief eliminate the tax balance.

What if the IRS denies my request?

Request the rationale, discuss your rights of appeal and seek professional assistance if the penalty is significant and/or complicated.

Should I call the IRS myself or hire a tax attorney?

Call self in simple situations. Call a tax lawyer if penalties are large, relief is denied, there are payroll tax problems, collections are denied or appeals are denied.

Conclusion

If you have been issued a penalty notice and wish to get the IRS to take a closer look at your account, a penalty relief by phone request may be a wise initial action to take. Be ready to call, know the penalty, state the exact reason for the call and request an appropriate relief.

In simple situations, it might be possible to resolve the problem with a telephone call. Form 843 or professional tax representation might be a better choice for denied requests, payroll tax issues, high penalties or complex reasonable cause issues.