Discussion:Penalty appeal process

From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Basic Tax Questions --> Penalty appeal process
Discussion Forum Index --> Tax Questions --> Penalty appeal process

Natalie (talk|edits) said:

January 20, 2008

I started a thread on this last summer and can't find it now. I have a client that was assessed penalties for late deposits of PR taxes. I think late filing fees were also assessed. I have a POA and wrote a letter last June asking for abatement because the bookkeeper was embezzling funds from the company and made it look like returns were being filed when they actually weren't. This letter did not include any separate documentation. The bookkeeper also worked for a relative of my client, and there were actually many companies that were defrauded. I did not want to have to provide details that I thought were not necessary (in order to protect my client's relative). (Yes, I've now learned we should have sent everything we had the first time.)

Abatement request was denied. We sent an appeal request on August 13 with copies of the police report and other documentation such as the report to the bank stating which checks drawn on the account were fraudulent. We received notice about a week after that indicating that the IRS would respond to the appeal within 60 days. Well, there was no response, so on January 8 I called the IRS. I was told that the file was "sent to another office." There was some discussion about different offices. I was put on hold several times. The end result was that the agent referred my case to the Taxpayer Advocate's office.

TA called me the other day not really knowing what was going on (he hadn't reviewed the file). After some discussion of IRS workloads and shifting of offices, he told me a letter was sent out on the 9th and that there would be another indication of how much time the IRS needs to review the appeal. TA wants me to call him back if the IRS does not respond within the new time frame. Client also received intent to levy notice because they only paid interest and not the penalties. We have placed a five-week hold on the account.

Okay. Today I got the letter that says they will contact us within 90 days. I also received a letter, addressed only to me, from the Appeals Team Manager. She's asking me if I would like to have a face-to-face conference, whether I have additional information, etc. No, I don't want a meeting. Just abate the penalty and move on.

My question is, is this normal? And what else can I expect? I've never gone through this process before. Client has suffered enough with stolen funds, extra accounting fees, legal fees, time spent trying to clean things up and is trying to just move on. What's the hang up here?

Carlosthetaxman (talk|edits) said:

23 January 2008

I'm working on a similar situation. I have encountered this problem with working through the hoops of the IRS offices and one phone call taking me to 5 different places. The Taxpayer's Advocate office finally got one of my situation's resolved after almost a year. They are overloaded or something and not depend on you to call them back to remind them and meanwhile the taxpayers get notices that send them into orbit.

I'm sending a late filing penalty denial to appeals today and we'll see how it goes. I think we're going to full pay to stop the nonsense in the mean time. We'll see what others have to say here.

It's interesting that you were offered a face-to-face conference. It's been at least 15 years since I was offered that.

Kevinh5 (talk\|edits) said:	23 January 2008
Natalie, I'm looking for that discussion for you, but found this one in the meantime: Discussion:Reasonable Cause - good excuses

Kevinh5 (talk\|edits) said:	23 January 2008
was this it? Discussion:Amending PR tax returns

Kevinh5 (talk|edits) said:

23 January 2008

Anyway, last month I didn't win anything on a similar appeal - an employee was embezzeling BUT the taxpayer couldn't prove it. The taxpayer had been granted a penalty abatement for a prior year (small amount) with the stern warning not to be late on their 941s again. Unfortunately, the newer amounts were much bigger and lasted longer. The appeals officer was not very nice or understanding. Good luck.

Natalie (talk\|edits) said:	January 23, 2008
Thanks Kevin. No, those are not the discussions I was thinking of, but thanks for looking. In this particular case there is no question about the embezzlement. Fraudster is in jail for wire fraud, theft, ID theft and on and on. I don't even know how many charges are pending against him. He was a pro.

Skasselea (talk\|edits) said:	23 January 2008
Natalie, they aren't going to abate on the basis of the request alone. Documentation must be provided, but you already knew that. Additionally, if the Notice of the Intent to levy was a CP 504, there is nothing to worry about. However, if the Notice of Intent to Levy was a 1058, you need to file a 12153 prior to the expiration of the 30 day period.

Natalie (talk\|edits) said:	January 23, 2008
All of the documentation went in with the appeal. The intent to levy was on CP 504. Thank you guys so much!

Natalie (talk|edits) said:

March 11, 2008

Well, one whole discussion on this issue seems to have disappeared. IRSfixer and I went back and forth regarding abatement of the penalties, and I wanted to check to see what he had said.

Anyway, client lost the appeal. I am really surprised. My client unfortunately hired a professional conman who had stolen someone else's identity and then stole from client. The guy's in jail. He had prepared the PR returns, and had prepared checks made out to the appropriate authorities to pay the taxes, so client thought everything was being taken care of. We submitted all kinds of documentation with the appeal request. Geez, they weren't out to defraud the IRS or anything, they were just taken in by a pro. Now I have to tell the client the bad news -- that they have to pay the penalty.

KatieJ (talk\|edits) said:	12 March 2008
Natalie, you might have been better off to accept the offer of a face-to-face meeting. I would never pass that up if I had the chance. It gives you the opportunity to go through the documentation with the decider and interpret it for him/her.

Natalie (talk\|edits) said:	March 12, 2008
I can't find that discussion, but I don't recall anyone recommending that course of action. In this situation, however, the fees could very well have made it economically not prudent to have a face to face meeting.

KatieJ (talk\|edits) said:	12 March 2008
I have more than once succeeded in getting something accomplished by sitting down with a hearing officer or audit supervisor and going through the evidence with him or her. But of course it depends on the amount at stake and the client's willingness to pay for your time.