The Executive Suite: How to Protect Your Assets From the IRS

Saturday, May 11, 2013

How to Protect Your Assets From the IRS

Just because the IRS has levied penalties against you on your unpaid taxes-doesn't mean that you have to pay them. In this article I will offer advice on how to proceed.

Suggestions

Generally, the first request for an abatement of IRS penalties should be done by mail. Upon receiving a tax bill with penalties, you should immediately write either a letter or complete Form 843 requesting a release of penalties. You can download this form from the IRS website (see Resources below). Be sure to include a copy of the IRS notice showing the penalty.
Be sure to include copies of any and all pertinent substantiating documents showing why you took the deductions you did. It is not likely that your request will be taken very seriously without this.
If at all possible, include any payment that you can for the taxes that are owed. Be sure to specify on the actual check that it is designated for the tax only and not the penalty. This will at least stop the accrual of interest and penalty on that amount of tax owed. Mail all of this to the address in the original notice and use the enclosed envelope, which has the correct IRS bar code.
Remember to make at least one copy of each item that you send to the IRS in this type of situation. Even a copy of the metered envelope that you sent to them serves as proof that you mailed in this request. Mail additional copies back if you receive any additional requests for money before an actual reply comes to your abatement request.
If your penalties are imposed during an audit proceeding, ask the auditor's manager to drop them before you sign the report. If that doesn't work, you can file a protest with the appeals office.