IRS: First Time Penalty Abatement

Always an adventure calling the IRS 

Me: "Hi, I'm calling about penalty relief for my client. He's disabled and --" 

Agent: "What's the account number?" 

Me: "He lost his job. Couldn't afford to file. He has severe anxiety and --" 

Agent: "I see. The penalty is $847. Next?" 

Me: "His anxiety is documented. He's been struggling for years. He literally couldn't handle opening the mail from you guys." 

Agent: "Understood. The penalty stands." 

Me: "He's on disability income. This is going to hurt him badly." 

Agent: "I hear you. Still $847." 

Me: "He was literally unable to function during this period. His doctor can verify --" 

Agent: "That's unfortunate. The penalty is assessed." 

Me: "So there's nothing we can do? No hardship exception? No compassion?" 

Agent: "Not without something to base it on, sir." 

Me: *long pause* 

Me: "I mean - unless I..." 

Agent: "You could...." 

Me: "Could what?" 

Agent: "Well. You'd have to say it." 

Me: "Say..." 

Agent: "THE words, sir." 

Me: "What words?" 

Agent: "I can't say them for you." 

Me: "It's not even a sure thing though. Could it work?." 

Agent: "Only one way to find out sir." 

Me: *long pause* 

Me: "I'm going to say it." 

Agent: "I'm bracing, sir." 

Me: "First time penalty abatement." 

Agent: "Excellent. Your client is eligible. I'm releasing the penalty now. We're all set." 

Me: "Wait. That's it? Just like that?" 

Agent: "Yes sir. The penalty is gone." 

Me: "It's automatic?" 

Agent: "Exactly." 

Me: "So why all the drama? Why couldn't you just tell me?" 

Agent: "Because most people don't understand how serious a decision it is to say THE words." 

Me: "It's that serious? Why?" 

Agent: "You just used your one shot." 

Me: "What do you mean my one shot?" 

Agent: "First time penalty abatement. You can only invoke it once per client. Ever." 

Me: "...once?" 

Agent: "That's right. Once... And then it resets again in three years." 

Me: "Wait, it resets? So we can do this again in a few years?" 

Agent: "Is there anything else I can help you with?"

by Roger Ledbetter, CPA, X |  Read more:

Image: Getty

[ed. Can you believe it? This is really a thing. Have some catastrophic medical bill (or windfall?) and can't or don't want to pay taxes this year? First time penalty abatement. See also: The IRS’s First-Time Penalty Abatement: What It Is And How To Get It (Forbes); and, other types of penalty relief (IRS). Also this.]