When to Use IRS Form 843 for Penalty Abatement

Sometimes, the IRS makes a decision based on incomplete or incorrect information. Other times, the IRS is responsible for a delay or makes a mistake when giving tax advice to a taxpayer. If any of these happen to you and it results in the IRS improperly or unfairly assessing a tax, penalty, fee, or interest against you, you can ask the IRS for an abatement or refund of the money you had to pay.

There are several ways in which to make this request, but the precise process depends on what penalties you want the IRS to abate and the reasons for your request. One of the more common methods involves using IRS Form 843, Claim for Refund and Request for Abatement. If you want help with this form now, contact us at Damien’s Law today.

The goal of this article is to take a closer look at this form, including when to use it, how to complete it, and what you can expect after you send it to the IRS. We’ll pay extra attention to using this form within the context of penalty abatement and also touch on when an alternative method for asking the IRS to change its assessment might be more appropriate. 

An Overview of IRS Form 843 

Form 843 is a form you submit to the IRS if you want a refund or abatement from the IRS for a penalty or certain taxes. You’ll usually use this form to request penalty relief when you’ve incurred a penalty due to incorrect information from the IRS, but you can also use it to request penalty waivers due to reasonable cause or first-time abatement.

When You Would Use the 843 Form from the IRS 

In addition to the above-mentioned reasons, you’ll also use Form 843 if you’re requesting:

• A refund of a tax, unless that tax has a specific form that must be used to request a refund.
• A tax abatement of a tax other than estate, gift, or income tax.
• A refund of certain payroll or employment taxes (such as Social Security and Medicare) that your employer improperly or mistakenly withheld, but for which your employer refuses to adjust.
• A refund for excess Railroad Retirement Tax Act (RRTA) tax withholding.
• A refund or abatement for a penalty or additions to tax imposed against you when either of these was due to reasonable cause or other excusable reason
• A refund for a penalty due to the misuse of dyed fuel.
• A refund for a branded prescription drug fee. 

Although Form 843 does not have an option to note that you’re requesting first-time penalty abatement, you can use this form for that purpose. 

When Not to Use IRS Form 843 

If you believe you put incorrect information on your individual income tax return and the incorrect information results in additions to tax, a penalty, fee, or interest, don’t use Form 843 to request a refund. Instead, use Form 1040-X, Amended U.S. Individual Income Tax Return to amend your original tax return. 

You also should not use Form 843 for situations where you filed a joint income tax return with a spouse, but your portion of the tax refund was used to offset the tax debt of your spouse. To receive your share of the joint tax refund, instead use Form 8379, Injured Spouse Allocation.

These aren’t the only times you’ll use a form other than 843 to request a refund or abatement, but they represent situations where Form 843 is often incorrectly used. If you’re unsure of whether or not Form 843 is the right option, talk with a tax professional.

How to Fill Out Form 843 

In most cases, you’ll use a separate 843 Form for each tax year, fee, penalty, additions to tax, or interest you want abated or refunded. To begin filling out Form 843, you’ll provide your basic contact information, including your name, address, telephone number, and Social Security number. If applicable, you’ll provide the Social Security number of your spouse as well. 

The rest of the form is divided into the following parts:

• Part 1: Declare the relevant tax period.
• Part 2: Provide the amount of money you want abated or refunded.
• Part 3: Check the box that relates to the fee, additions to tax, interest, or penalty you want refunded or abated.
• Part 4: If you’re asking the IRS to abate a penalty, you’ll list the specific section from the Internal Revenue Code that forms the legal basis of the penalty. For example, if your penalty is the result of a failure to file a tax return, you’ll cite IRC Section 6651(a)(1). If the penalty is the result of a failure to pay a tax shown on the tax return, you’ll cite IRC Section 6651(a)(2).
• Part 5a: Here’s where you identify why you believe the IRS should refund or abate interest, penalties, or additions to tax (additional information about this section will be discussed below).
• Part 5b: Provide the date(s) of any interest, penalty, or tax liability payments you believe should be abated or refunded.
• Part 6: Check the box that relates to the form or fee connected to the fee, penalty, interest, or additions to tax.
• Part 7: If you believe the IRS should provide a refund or abatement that’s not listed in Part 5a, you’ll identify your reason or justification here. Part 7 is also where you provide the necessary information to support your reason for the refund or abatement request. For instance, if an IRS error or delay led to interest you want to be abated, you’ll list the type of tax that led to interest, when the IRS first notified you about the deficiency, the tax period for which you want the interest abated, the reasons why being charged interest would be unfair, and the underlying facts and circumstances surrounding what happened.

If the reasons for your request can be supported with additional documentation (such as the IRS providing you with erroneous written advice), you’ll need to provide additional documentation such as copies of the writing containing the wrong information, your written request for such advice, and any reported tax adjustments caused by the erroneous advice.

You’ll finish Form 843 by signing it. Your spouse’s signature may also be necessary if your request stems from a jointly filed return. 

A Closer Look at Part 5a 

Under Part 5a, there are three main reasons for the refund or abatement of interest, penalties, or additions to tax. First, the IRS will abate the interest you incurred if it made an unreasonable error or caused a delay while performing a ministerial or managerial act. A ministerial act is a procedural act while processing your case and doesn’t involve discretion or the exercise of judgment. A managerial act occurs while processing your case and results in a permanent or temporary loss of records. It also includes decisions from IRS management that involve discretion or judgment. However, it doesn’t include the application of federal tax law.

Second, the IRS will abate a penalty or additions to tax if they were the result of wrong written advice from the IRS. The advice must be in writing and come from an IRS employee or officer acting in their official capacity. Additionally, you must reasonably rely on the advice, the advice must have been given in response to your specific written request for advice, and any additions to tax or penalties can’t have been the result of your failure to provide the IRS with accurate or complete information.

Third, if you want the IRS to abate or refund a penalty or additions to tax based on a reasonable cause or other reasons allowed under the law, you’ll need to identify the applicable law. Specifically, this will be the court case, regulation, statute, or other legal authority that provides a right to a refund or abatement when the taxpayer can show a reasonable cause that applies in this particular case. 

When to Send Form 843 to the IRS 

In the majority of cases, your refund or abatement request must be filed with the IRS within two or three years. The two-year rule applies if you want a refund for a tax payment you already made to the IRS. The two-year clock begins on the date you made the payment.

The three-year rule applies when your request stems from a past tax return. You must file Form 843 within three years from the due date of the relevant tax return or the date you filed if later. 

Where to Send Form 843 

The address you used to mail Form 843 to the IRS depends on why you’re using Form 843. If it’s in response to an IRS notice concerning a certain tax (such as income, gift, estate, excise, or employment taxes), then you’ll mail Form 843 to the address provided on that notice.

If you’re claiming a refund on a tax matter that involves Form 706/709, then you’ll mail Form 843 to:

Internal Revenue Service Center
Attn: E&G, Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915

If you’re claiming a refund for a branded prescription drug fee (and responding to Letter 4658), then you’ll write “Branded Prescription Drug Fee” across the top of Form 843 and mail it to:

Internal Revenue Service
Mail Stop 4921 BPDF
1973 N. Rulon White Blvd.
Ogden, UT 84404

Requests concerning penalties or any reason other than an IRS notice, Letter 4658, or an estate tax claim for a refund require you should send Form 843 to a specific IRS service center. This will be the service center you would use to file a current year tax return for the tax that corresponds to your request.  

What Happens After Filing Form 843? 

Depending on how busy the IRS is, as well as the complexity of your request, it could take several weeks to several months for the IRS to process your 843 form. If time is of the essence, it might be helpful to consult with a tax professional who can help you with Form 843 to reduce the chances of any delays and discuss any alternative options.

If the IRS doesn’t grant your request, any interest or penalties may continue to accrue. If you can’t pay off your tax balance or come to an agreement with the IRS to pay it off over time, then you need to be aware that the IRS may begin collection activities, like filing a lien and imposing a levy. If you disagree with the IRS’ denial of your Form 843 request, an appeal may be possible, but you should talk to a tax pro for more information and guidance on your available options. 

Alternatives to IRS Form 843 

Form 843 is among the most popular ways of asking the IRS for an abatement or refund because it’s a relatively simple form to complete and doesn’t have the most oppressive information requirements for you to comply with. That being said, if Form 843 isn’t an option, there are several alternatives to consider.

If you’re eligible for First Time Abate tax penalty relief, you can make your request by simply calling the IRS. If this is an option, there should be a toll-free number provided at the top-right corner of your IRS notice or letter. However, you can also use Form 843 for first-time abatement. In fact, if you file this form requesting relief for reasonable cause but you qualify for first-time relief, the IRS will process your request under the first-time relief rules.

Sometimes, you’ll need to request your refund using a form other than 843. In addition to Forms 1040-X and 8379 previously discussed above, other forms include:

• Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. You’ll use this form if you need the IRS to make changes to your employment taxes.
• Form 1045, Application for Tentative Refund. This is when the refund request relates to certain business tax credits or certain business losses. 

Get Help With Your Tax Refund or Abatement Request

Asking for a refund or abatement using Form 843 or a different IRS form can be confusing. Then there are cases where you may not even know which form to use. Whether you just need confirmation that you’re completing Form 843 correctly or you have a highly complex tax matter, consider discussing your case with a tax professional with experience handling tax refund and abatement matters.

Getting professional help can reduce the uncertainty of your request, help you determine if there are any additional options to think about, and ensure whatever process you use is done as accurately and completely as possible. To learn more about how a tax pro can help, contact Damiens Law. You can schedule a consultation by calling 601-476-1361 or using our online contact form.