Request for Late Payment Fee Abatement

[GLReneau]

One of my clients was late in paying taxes owed on his 2023 returns. He wants to request a fee abatement and has not been penalized in the past three years by the IRS (apparently that's the applicable time window).

It's my understanding he can simply apply and the IRS tax representative will make the request directly through the system right on the phone. IF the request is denied there is a second step to the process and that is to answer a set of questions as to why the tax payment was late.

When I initiated the discussion with the tax rep, however, he immediately moved to step two and began asking questions. Not being terribly familiar with the process, was the tax rep wrong in not asking the system software for an abatement first? I'd obviously prefer the easiest step be taken first before the client has to answer a number of questions. I'd be most appreciative to hear of others' experiences and guidance.

[IRonMaN]

Out of curiosity, what was their really good excuse for paying late?

[BobKamman]

The applicable window is the three tax years preceding the one for which abatement is requested.  What year is involved here?  Little early for 2024 so probably 2023, and you have to go back to the Covid year of 2020.  Do you have transcripts for 2020 through 2022, or are you relying on the taxpayer's memory?

It may have been that the IRS phone assistor's IDRS was down and it was not possible to check the history in real time.  That's why a written request is more likely to succeed. It only takes a paragraph and a postage stamp.  

[GLReneau]

Thanks, this is helpful.

[BobKamman]

IRS “Taxpayer Services” nationally started the year with 42,161 employees. I think this includes many Service Center employees, as well as call center and local office representatives. 80 were probationary terminations, 2,017 took the deferred resignation offer, and IRS plans another 1,150 layoffs. So the staffing will decrease by about 8%. You think they’ll still be able to take phone calls and abate penalties in real time? I guess it depends on how many phone lines are removed.

If you can’t get help, there is always Taxpayer Advocate. They started the year with 1,970 employees. After 8 probationary terminations and 83 deferred resignations, there were 1,879 left. And now the plan is to terminate 430 of them, or 23%. Well, TAS was sometimes helpful while it lasted.