A taxpayer came to TAS for assistance because the IRS assessed a penalty for not reporting income accurately. The taxpayer relied on a tax professional while the taxpayer was on active military status, who incorrectly advised the taxpayer to not include wages earned while the taxpayer was out of the country.
The taxpayer was audited and agreed to including the additional income and paid the additional tax and penalty. However, the taxpayer wanted to dispute the penalty because he relied on a tax professional. The taxpayer submitted full payment, including the penalty, and filed a claim to reverse the penalty.
The IRS incorrectly interpreted the claim for penalty reversal as a claim to reverse the additional tax assessment and delayed processing of the penalty claim by more than 30 days. TAS contacted the IRS and requested they process the penalty abatement claim and provided support to show reasonable cause that the taxpayer tried to file correctly and had relied on incorrect advice of a tax professional. The IRS agreed and removed the penalty.