Chapter 6: The Claim for Abatement

Getting a Tax Abatement

By Seth Maynard

Tax abatement is a reduction or exemption from taxes. Did you know that it was possible for you to avail of it? Section 6404(a) of the Internal Revenue Code (I.R.C.) allows for abatement of the unpaid part of your tax or liability assessment when: it is too much, it was assessed after the period of applicable limitations has expired, or it was incorrectly or illegally assessed.

You would know that you have unpaid taxes as the Internal Revenue Service (I.R.S.) would send you either a 30-day letter or proposed adjustment letter or a 90-day letter or Notice of Deficiency. In either scenario, the I.R.S. is proposing to make an assessment of what you still owe. Fortunately, in either scenario, you can make an abatement claim and contest them. Take note that timing is very important in this matter. One should respond within 30 days from the date a 30-day letter was issued. The response time to a 90-day deficiency notice, from the date it was issued, is 60 days.

When you make a claim for abatement, you must state why you are making the claim. Whether the assessment was too much, was too late or was incorrect or illegal, you must have documentary evidence that it was so. This is where the Freedom of Information Act (F.O.I.A.) comes in handy. You may reconstruct your case by filing a F.O.I.A. request for the “Examination Administrative File.”

If and when you receive documents, you may find irregularities that would help support your cause. For example, you may find an I.R.C. 6654(a) penalty. This means that the Commissioner wants to assess you for unpaid estimated income taxes. He may even want to assess you for interest that could have been made on the amount of unpaid estimated income tax. Know that a 1984 amendment to the law expressly prohibits the assessment of an unpaid amount of estimated income tax. Furthermore, one cannot impose interest on money that was not meant to be collected. Seeing this type of penalty in your file tells you that the assessment of your tax was incorrect or illegal.

You may also want to check for the existence of a Form 23C, a Summary Record of Assessment. Upon signing this document, the assessment officer signifies that assessment was made. Know that no tax may be collected without a proper assessment. A proper assessment requires that a Form 23C be accomplished and signed by the assessment officer. The absence of Form 23C means that proper assessment has not been made and therefore, no tax may be collected!

If this is good news, understand that there’s a little bad news. There are several letters and forms to fill out to perform all these. There are also details like addresses and timing necessary to successfully execute an abatement claim. The other piece of good news is that all the forms and letters you would need are found in the third edition of Michael Ioane’s “Boston Tea Party.” Aside from chapters of valuable information, ready-to-use materials are collected in a binder for you to simply pull out and use.