Tax Disputes & Tax Controversy Services

Filing partnership returns late can cause penalties to be assessed by the IRS, which is considered a tax controversy. Fortunately, the IRS acknowledges that mistakes happen and may offer ways for partnerships to request that penalties be waived if a good reason exists. Partnerships are allowed to request abatement of these penalties if they meet the requirements of Revenue Procedure 84-35.

In this case, a Cendrowski Corporate Advisors client alerted our team to a new partnership they had formed in the prior tax year. Unfortunately, they provided this information after the original due date of the partnership return. This misstep meant that an extension had not been filed by the original due date, either.

Our team prepared and filed the return a few months later. The IRS sent tax notices to the partnership, notifying them of a penalty to the partnership for the late filing and payment. This tax controversy notice did mention that if the partnership had a good reason for filing late, a signed letter could be sent, to state their case and ask for a reduction or elimination of the penalties.

Cendrowski Corporate Advisors drafted a response letter requesting an abatement of the penalty assessed by the IRS under IRC Section 6231 and Revenue Procedure 84-35, which allows for the abatement of penalties on late filed returns if the partnership can show reasonable cause and meets four requirements. Our response detailed the requirements and how the partnership met each one. The IRS sent the partnership a letter stating that all penalties had been removed since we met all requirements. This action saved our client significant fines, penalties and interest.