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taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 642
Experience:  Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Have an S corp with 11 shareholders. One died in Dec 2012,

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Have an S corp with 11 shareholders. One died in Dec 2012, filed return noting that did not have TIN for deceased shareholder , but would furnish ASAP. President's wife was hospitalized with lung cancer at Mayo Clinic day notice was sent from IRS of incomplete return, he was occupied with her care until late June when mail was forwarded. IRS did not contact preparer , but assessed penalty of $8580 ($195 per month per shareholder for four months). Sent letters 6/29 and 7/10 explaining situation and TIN. No reply ,but now received notice they will levy on 8/5/2013. How should we procede?

Hi! Welcome to Just Answer! This question was open, as the expert you asked for seems to be unavailable. I see you are online, and this question has high urgency, so with your permission I will assist you.


You followed the proper procedure in contacting the IRS as soon as you found out what was happening. However, your letters may not have been enough to convince them to abate the penalty.


You need to write a letter asking them to abate the penalty under the reasonable cause exception. Internal Revenue Code (IRC) §6051 allows for the penalty to be abated based on "reasonable cause". Reasonable cause is based on all the facts and circumstances in each situation and allows the IRS to provide relief from a penalty that would otherwise be assessed. Reasonable cause relief is generally granted when the taxpayer exercised "ordinary business care and prudence" in determining their tax obligations but nevertheless failed to comply with those obligations. In this case, your obligation was to file a timely tax return.


Since you hired an outside tax preparer and are asking questions on this site, I am assuming that you are not tax experts. You should point that out in your letter. As such, the facts that you hired outside preparers, and attempted to file, even noting that the one shareholder's SSN was not available, indicates that you exercised ordinary business care and prudence. You performed all the acts that a reasonable taxpayer would do. You should also point out in your letter that had you known that they would not accept the return, you could have filed for an automatic 6 month extension of time to file the tax return, which would have given you until September 15 to file the return.


Put a letter together for using the above information, and send it to the address on the original notice. Include copies of the original note included with the return which stated that the SSN was not available but would be obtained, as well as copies of the other two letters that were sent.


Make a copy or two before you send it. Then, call the phone number on the IRS Notice of Intent to Levy, and ask them for a 60 day hold (if not more). Explain the situation, and offer to fax your letter to them. They may or may not want to see it. However, they do have the ability to put a hold on the levy.


Between these to actions, you should be successful in getting the levy stopped and getting the penalty abated. I have written dozens of these letters, and have been successful with most of them. If you would like, I can upload a sample letter in the morning when I get back to the office, just let me know.


I hope this helps with your situation! If you have any more questions, please feel free to ask! If you have found my answer helpful, please rate me highly! I would appreciate it!


Thanks again, and have a great evening!



taxmanrog and other Tax Specialists are ready to help you

I saw your request had high urgency. I have not heard back from you as to whether you wanted a sample letter or not.


If my answer helped you, please don't forget to rate me highly! I would appreciate it!


Have a great week!