IT’S bad enough to receive a tax bill from the IRS. It gets worse when penalties and interest are added. Malo.
1. If the penalty is minimal, do it yourself. You may want to ask a tax accountant to review your letter.
2 .If the amount is substantial, ask a tax professional to represent you.
3. Sign a Power of Attorney (POA) in favor of your tax representative.
4. If you do it yourself, call the IRS agent that you are requesting penalty abatement.
5. The agent will probably ask you to write a letter and submit supporting documents.
6. Do not send original documents. Agents are just like us – some are organized, some not so, just like most of you (not me, I’m very organized). A letter not received is, just as it says, not received.
7. Write a formal letter using standard business format.
8. This is not the time to write a novel. Be concise. Use a 1-2-3 with A-B-C or bullet style. This style will be appreciated by the agent who doesn’t have time to read War and Peace or Dr Zhivago.
9. Be clear and specific. Cite tax issues, dates, and amounts.
10. If there are complex issues, plead reasonable cause. Read our tax tips on reasonable cause.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].