Whenever I get a new client, I pull up their old transcripts and send out first-time abatement requests for any eligible years with penalties. It’s a small step that helps start things off on the right foot.
I usually go back to 2000, sending FTA requests by mail. Sometimes it takes 3-15 months to get a response, but I’ve noticed that around two-thirds get approved. The penalties get removed, and clients usually get a refund with interest that ends up more than the original penalty amount. But about one-third come back with a denial due to the refund statute expiration date.
Just this week, one request for 2013 was approved, but another one for 2017 for a different client was denied. Can’t figure out why—any ideas?
I usually just call the IRS to get FTAs done. It’s quick, and I know right away if it’s approved. If the agent doesn’t approve it, I hang up and try again. I also use Pitbull, so I’m almost always sure they qualify.
@Tyler
Getting an FTA over the phone can take just 15 minutes on a good day, but sometimes it’s a lot longer. For me, it’s easier to print a request from a template and drop it in the mail.
If it’s a big penalty and the client is really stressed, I’ll call. Otherwise, I’m okay waiting for a mail response.
Ori said: @Sage
Do you mind sharing where you mail it, and maybe the text of your template? I usually call but would be open to mailing if it’s more efficient.
I send it to the service center that handles returns for the area. (Use the address in the instructions if you don’t have a penalty notice.) The letter is simple: “I represent the taxpayer and request a first-time abatement of penalties.”
Anything older than 2021 can still qualify for abatement, but the amount usually has to go toward a year where the client owes. They can’t send a refund if it’s a closed year.
I apply old abatements to balance dues when clients owe. Just save the abatement and apply it when they have a balance. But remember, they must owe something at the time it’s processed, or it won’t work. They usually waive additional interest and penalties when they apply the abatement.
You also have to mail these older requests—PPS agents can’t see or work on closed years.
@Wilder
Funny, I remember hearing something like that a while back, but when I tried to find it again, I couldn’t. (Not just for FTA, but that claims past the refund statute could be applied to a balance due.) Any chance you have a reference for this?
In practice, though, I haven’t seen that happen. Recently, they refunded a 2013 FTA without a balance due—removed the penalty, added interest, and sent a check.