Comments on: Removing Penalties and Interest Charges – Can you do that?

By: Darrin Mish

Darrin Mish — Fri, 12 Mar 2010 18:43:37 +0000

Only until the Collection Statute expires.

By: Lisa

Lisa — Tue, 09 Mar 2010 21:45:36 +0000

Thank you – I appreciate the prompt and thorough response.

I have another question: in Nov of 1998 my wages were garnished by the IRS and I had to call them. In the course of collection my income and expense info, the agent asked when my car would be paid off and I told her. She said that when it is paid off I have to send the amount of my car payment to them. Would I need to make payments only until the statute expires, or would my sending them payment open another 10-year can of worms?

Thanks again.

By: Darrin Mish

Darrin Mish — Tue, 09 Mar 2010 20:53:59 +0000

Lisa,
Good question. The penalties and interest expire when the underlying tax assessment expires. For example, let's say a taxpayer filed a return with a balance due on April 15, 2002. A ten year statute begins to run and if no tolling factors arise, the statute would expire on April 16, 2012. Now let's say our taxpayer was audited and additional tax was assessed on July 5, 2004. An additional collection statute would begin to run on that assessment, and assuming no tolling factors, it would expire on July 6, 2014. The penalties and interest attributable to EACH assessment expire when the collection statute for that assessment expires. I hope this answers your question. Thanks for asking it!

By: Lisa

Lisa — Tue, 09 Mar 2010 19:57:57 +0000

I've been researching online and something is still not clear to me…..suppose someone submits tax returns in fall of 2000. The tax might be assessed sometime in 2002. Penalties and interest will continue to accrue over the 10-year statute period. Do ALL of the penalties and interest disappear when the statute of the initial tax is expired, or do the 10 years of penalties and interest fall off at the end of each year over 10 years? Thank you

By: Darrin Mish

Darrin Mish — Mon, 18 Feb 2008 18:05:01 +0000

You need to prepare a penalty abatement letter. You do not need a form 843. You should be prepared to explain why you should have your penalties forgiven despite the fact that you filed and/or paid late. The standard is that even though you exercised reasonable business care and prudence something happened that you could not have foreseen that caused you to file and/or pay late.

By: Kathy

Kathy — Mon, 18 Feb 2008 16:47:34 +0000

My husband had taxes prepared by an accountant in 2003–unfortunately he never filed them. Now–we owe triple the amounts on both federal and state. We were married at the time but filed separately. I believe we have a case as to why the returns were not filed. We have been trying to work with the IRS but are getting nowhere. I did sent a letter asking for abatement of penalties and interest (I did not fill out the form mentioned IRS form 843). All previous years prior to and after 2003 were filed appropriately for him. Any thoughts?