When Can the IRS Abate Interest?
Understanding when the IRS can abate interest is a crucial topic for taxpayers dealing with tax debt. Interest on unpaid taxes can accumulate quickly, adding a significant financial burden. This article explores the specific circumstances under which the IRS can abate interest and provides guidance on how to request it.
What Is Interest Abatement?
Interest abatement refers to the reduction or elimination of interest on unpaid taxes, penalties, or other tax-related debts. While penalty abatement often relies on “reasonable cause,” the criteria for interest abatement are more stringent and are explicitly outlined in tax law. It applies only in cases where there has been an unreasonable error or delay by the IRS, as specified in IRC § 6404(e)(1).
When Does Interest Abatement Apply?
To qualify for interest abatement, the following conditions must be met:
- Unreasonable Error or Delay by the IRS
The IRS must have made an administrative mistake or failed to take timely action, leading to the accrual of interest. This is often referred to as a “ministerial or managerial act.” - Examples of Eligible Situations
- The IRS lost records provided by the taxpayer, causing a delay.
- An IRS agent assigned to the case went on extended leave or was unavailable due to training, resulting in inactivity on the case.
- Other situations may qualify. These are just examples of situations the IRS has found to qualify.
- Taxpayer’s Role
The taxpayer must not have contributed to the error or delay. If the taxpayer’s actions or inactions caused the issue, interest abatement will not be granted.
How to Request Interest Abatement
If you believe you qualify for interest abatement, you need to formally request it in writing. Here are the steps to follow:
- Use Form 843
The preferred method for requesting interest abatement is by completing and submitting Form 843, “Claim for Refund and Request for Abatement.” - Provide Supporting Documentation
Include any records or correspondence that demonstrate the IRS’s error or delay. Examples might include proof of when you submitted requested documents or evidence of inactivity by the IRS. - Submit Your Request
Mail the completed Form 843, along with supporting documents, to the IRS office handling your case. Ensure you follow any additional instructions provided by the IRS for your specific situation.
Key Takeaways
Interest abatement by the IRS is possible but applies only under narrowly defined circumstances:
- There must be evidence of an unreasonable error or delay caused by the IRS.
- The taxpayer must not be at fault for the error or delay.
- A written request, preferably using Form 843, is required to initiate the process.
If you’re uncertain whether you qualify for interest abatement or need assistance with the process, contact us.