Find a sample letter to request waiver of penalty and help reduce your tax bill
The IRS has many programs available to help taxpayers legally reduce their tax liability, settle their tax debt for less than they owe, and reduce penalties and fees associated with late payments or late tax returns.
To learn more about the high costs of failure-to-file and failure-to-pay penalties, refer to this post on IRS penalty abatement. Penalties can accrue quickly and can grow to equal 25% of your tax bill. Getting these penalties waived can be your first step toward tax debt relief.
Types of IRS Penalties
The IRS may charge penalties for failing to file, failing to pay, submitting inaccurate tax returns (accuracy-related penalties), and failing to file accurate, timely information returns or payee statements. You can request abatement for any of these penalties.
How to Apply for Penalty Abatement
You can apply for penalty abatement by phone if you receive a tax bill. Call the number in the top right corner of the letter. You can also apply by filling out Form 843, Claim for Refund and Request for Abatement.
The IRS website notes that if you don’t receive penalty relief by phone, your request may be accepted in writing with supporting documentation.
Rather than dealing with long IRS wait times on the phone, it may be useful to write a penalty abatement letter and submit it, along with any supporting documentation.
Types of Penalty Abatement
The IRS offers first-time penalty abatement for qualifying taxpayers who were late filing or were late to pay for the first time in three years. When the IRS waives the penalties, it will also deduct the interest charges on those penalties, which can make a substantial dent in your total tax bill.
The IRS also offers penalty abatement for taxpayers who have a reasonable cause for failing to pay their taxes. According to the IRS website, “reasonable cause” does not necessarily include mistakes, oversights or a lack of funds.
However, if you received an accuracy-related penalty and can show that you made efforts to report the correct tax amount and acted in good faith, the IRS may waive the penalty, according to the Code of Federal Regulations.
Your request will be evaluated on a case-by-case basis. Writing a convincing abatement request letter can help. Hiring a tax professional to help draft the letter and negotiate on your behalf can improve your odds of successful penalty abatement.
We’ve included some sample letters to help guide you, below. The Alleviate Tax team is here to help you navigate the process and achieve the best outcome.
Reasonable Cause Sample Letter to IRS to Waive Penalty
If you want to apply for an abatement by mail rather than by phone, you’ll need to know how to write a penalty abatement letter. We’ve provided a penalty abatement letter sample below for you to reference and modify.
IRS
[Mailing address indicated on your tax notice]
[Tax year, type of tax form and tax debt you are requesting abatement for]
[Your legal name as it appears on tax forms]
[Mailing address]
[Social Security Number or Tax ID Number]
[Today’s Date]
I’m writing to request tax penalty abatement for [failure to pay or failure to file] for the [year] tax year with reasonable cause. I was [late with tax filings/late with tax payments] because [facts and circumstances explaining why you could not meet your tax obligations].
Please find supporting documentation enclosed. [Name the type of supporting documentation you are sharing, such as photographs, insurance claims, doctor’s letter, death certificate of a loved one.]
[You can also share additional details of why the situation created reasonable cause for late payments or late tax filings. You may share other areas of your life that were affected, such as employment.]
[In another paragraph, you might explain your intention to pay, including details of an installment agreement you’ve established. If you recently paid your tax debt in full, have kept up-to-date on installment payments, or you’re negotiating an offer-in-compromise, include the details and where the case stands.]
Finally, close with the following: Please accept my petition for abatement of penalties with reasonable cause under IRM 20.1.1.3.2, Reasonable Cause.
Sincerely,
[Your signature]
First Time Penalty Abatement Letter Example
A first-time penalty abatement letter should include similar information as a reasonable cause penalty abatement letter.
In a first time penalty abatement letter, you’ll want to outline the reasons you are qualified for a penalty waiver. IRS tax laws indicate that you should qualify if you have:
- Not claimed first time abatement in the past three years
- A three-year history of on-time tax filings and payments
- Paid your past-due taxes or established an installment agreement
A first time IRS abatement letter can be simple and straightforward compared to a reasonable cause penalty abatement letter. We’ve included a sample request letter to waive penalty below that you can modify to meet your situation.
First Time Abatement Letter Sample
IRS
[Mailing address indicated on your tax notice]
[Tax year, type of tax form and tax debt you are requesting abatement for]
[Your legal name as it appears on tax forms]
[Mailing address]
[Social Security Number or Tax ID Number]
[Today’s Date]
I’m writing to request tax penalty abatement for [failure to pay and/or failure to file] for the [year] tax year. For the past three years I have timely filed my federal income tax returns as an [individual/joint] taxpayer. I have not received first time penalty abate in the past three years.
[In another paragraph, you might explain your intention to pay, including details of an installment agreement you’ve established. If you recently paid your tax debt in full, have kept up-to-date on installment payments, or you’re negotiating an offer-in-compromise, include the details and where the case stands.]
Finally, close with the following: Please accept my petition for first-time penalty abatement.
Sincerely,
[Your signature]
PPA
Here’s what people are asking about an IRS abatement letter sample.
What is a good reasonable cause for penalty abatement?
The IRS considers circumstances like natural disasters, death or serious illness, honest errors, and undue hardship as reasonable causes for failure-to-file or failure to pay your taxes. When you make your case for penalty abatement, include all supporting documentation to demonstrate the cause.
How to write a letter to waive penalty charges?
When you contact the IRS to waive penalty charges on your tax bill or to waive failure-to-file penalties, be professional, concise, and include any reasonable causes for missing the deadline.
How do I ask the IRS to waive penalties?
If you incurred penalties on tax debt, you can call the IRS for penalty abatement, or submit Form 843, along with any supporting documentation. That documentation may include a penalty abatement request letter.
