How to Correct Penalties or Late Fees From Previous Tax Years
Taxpayers who do not pay their tax owed on or before the April 15 due date are assessed a failure to pay penalty while taxpayers who owe money and do not file by April 15 are assessed both failure to pay and failure to file penalties. These penalties continue to accrue over time and can add a substantial amount of money to your tax bill. The IRS has a process for taxpayers to request removal of penalties or fees.
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Instructions
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Call the IRS customer service line at 1-800-829-1040 Monday through Friday between the hours of 7 a.m. and 10 p.m. your local time to request an abatement of penalties over the phone. The customer service representative will often offer a one-time only abatement for taxpayers who have a history of timely filing tax returns. For other taxpayers, the IRS customer service representative will use an automated process to determine if you are eligible for an abatement. The system will prompt the IRS representative to ask questions and use the answers to determine if the conditions for an abatement have been met. The most important question that you'll be answering is why you filed the tax return late. If the excuse is considered reasonable, then you may be granted an abatement. Examples of conditions that would be considered a reasonable cause include illness, incarceration or military service.
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Complete IRS Form 843, Claim for Refund and Request for Abatement, and mail it to the IRS office that processes returns for your area. Attach a detailed explanation that includes the circumstances that caused the late filing or late payment, relevant dates and any other information you'd like the IRS to consider. If your penalty is not due to late filing or late payment, IRS Form 843 is still the form to use to request that penalties be removed or reduced.
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Write to the IRS if you feel that penalties were assessed due to erroneous information that you received from an IRS employee. By law, the IRS is required to remove penalties that were due to IRS employee errors. Send the IRS a detailed letter outlining your interaction with the IRS employee and, if possible, include dates, times and the employee's seven digit I.D. number. If the erroneous information was offered via written correspondence, include a copy of the letter or notice with your letter.
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