Reasons to ask for abatement of penalties.

[Jack from Ohio]

We have a client that had not filed returns for 11 years. She had/has a very successful Sched C business. (Avg profit of about $95K/yr) Long story short, in 2011 the IRS took a HUGE amount from her checking account. ($137K)

We have since then, created, filed and the IRS has processed all but 2010 and 2011 returns. They have made adjustments to how much she still owes accordingly. She still owes $100K+ and is taking the steps to get the money.

Now the question. We want to file for abatement of some of the penalties. We are filling out Form 843, and the only reason we can get from the client is... "...unless there is a medical term for excessive fear of the IRS, I don't know."

Truly she was afraid to file in fear of the IRS. Any suggestions of what we might use as a reason? When we filed her returns, she did have all the documentation we needed to do them correctly.

I just looked, and IRS Phobia is a recognized psychological condition!!

[Elrod]

Jack,

Here is an idea.

http://www.kjrh.com/dpp/news/problem_solvers/irs-announces-new-relief-for-people-who-owe-back-taxes

[kcjenkins]

If, in fact, IRS Phobia is a recognized psychological condition, then the client should consider seeing a psychologist and getting a professional evaluation. If she gets a letter from a Dr that she does, in fact suffer fro a medical condition, that is an accepted basis for forgiveness of penalties. It would certainly be worth the cost of the medical examination.

http://lawyer4tax.com/tag/irs/

[jainen]

>>consider seeing a psychologist and getting a professional evaluation... that is an accepted basis for forgiveness of penalties<<

Like so many, this old tax dodge has already been tried. In TC Memo 1993-394 [compare to the 1990 date in your link], "Court wasn't convinced taxpayer had phobia of tax documents that prevented him from filing tax returns. Psychiatric finding was rejected: it was arrived at after only one visit, and no treatment was prescribed. Further, taxpayer performed other normal business activities, and even hired tax attorney to prepare his returns. Negligence penalties were also upheld."

This lame excuse is an affront to patients with genuine mental health problems.

[kcjenkins]

I think you missed my point. The case you cite is a valid one, but does not preclude someone winning if their facts deal with the issues mentioned in that case. I think Jack has a better idea than any of us as to the validity of the t/p's claim, since he has had actual contact with the t/p. Just because it's not an easy excuse to prove does not mean that no case can be valid. For just one example, in that case you cite, the t/p had paid a tax professional to prepare his tax returns, he just did not mail them. Jack's client did not ever contact a tax professional until after being caught by the IRS, as I understand it.

If he gets opinions from multiple doctors, and starts a program of treatment, for example, that could make a lot of difference. I'm not suggesting that every case is valid, but neither do I think there are no valid cases, Janien, and if Jack thinks this is one of the valid ones, he should try to help his client, don't you think?

[jainen]

>>he should try to help his client, don't you think?<<

Of course he should help his client. He should explore the genuine issues, which for all I know are indeed medical. And he should help with the collection process if it comes to that.

In my opinion, Jack's assertion that "IRS Phobia is a recognized psychological condition" is false and will not help his client. However, I will keep an open mind if Jack will cite his source, as I did mine.