CTRS CTRS Penalty Abatement and Relief

Question 1

What are the three most common IRS civil penalties that CTRS practitioners seek to abate?

Accepted Answer

Failure to File (FTF), Failure to Pay (FTP), and Failure to Deposit (FTD)

Answer

The three most commonly abated penalties in tax resolution practice are the Failure to File penalty (IRC §6651(a)(1)), Failure to Pay penalty (IRC §6651(a)(2)), and Failure to Deposit penalty (IRC §6656).

Question 2

What is the 'reasonable cause' standard for penalty abatement?

Accepted Answer

The taxpayer exercised ordinary business care and prudence in meeting their tax obligations but was unable to comply due to circumstances beyond their control

Answer

Reasonable cause for penalty abatement requires showing that the taxpayer exercised ordinary business care and prudence but was still unable to comply due to circumstances beyond their control.

Question 3

What is First Time Abatement (FTA) and what are its eligibility requirements?

Accepted Answer

An administrative waiver available to taxpayers with a clean compliance history (no penalties in the prior 3 years) for failure-to-file, failure-to-pay, or failure-to-deposit penalties

Answer

FTA is an administrative penalty waiver for taxpayers who have had no penalties in the 3 prior tax years, have filed required returns, and are in payment compliance for the current year.

Question 4

What IRS form is used to formally request abatement of a penalty?

Accepted Answer

Form 843 (Claim for Refund and Request for Abatement)

Answer

Form 843 is the standard form for requesting abatement of penalties and interest, or for claiming a refund of penalties already paid.

Question 5

What is the 'statutory exception' basis for penalty abatement?

Accepted Answer

Congress has written specific exceptions into the tax code that automatically prevent certain penalties, such as the estimated tax penalty safe harbors

Answer

Statutory exceptions are specific provisions in the Internal Revenue Code that exempt taxpayers from penalties under defined circumstances, such as the estimated tax payment safe harbor provisions.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS CTRS Penalty Abatement and Relief