Below is a sample IRS 972CG Penalty Notice Abatement Letter, in this case involving an acquisition of a non-compliant company. It is merely intended to provide an example. You must customize such a response letter according to the circumstances.
The IRS Penalty Notice proposes civil penalties for information returns that are:
– Filed late
– Filed using incorrect media
– Filed with missing or incorrect TINs
The notice will include instructions on how to respond. Section 6721 of the Internal Revenue Code provides criteria to dispute a proposed penalty. To dispute the penalty, send a letter that references the 972CG notice received, including its date. You should describe your organization’s compliance history and the circumstances in this/these instances beyond your organization’s control, and show that your organization acted in a responsible way.
For more information, see IRS Publication1586 “Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/Tins”
Example of a Reply Letter to IRS Proposed Penalty Notice
Internal Revenue Service
RE: Company Name: Acme Inc.
Company TIN: 20-#######
IRS Form: 972CG
Tax Period: 20–
Dear Sir or Madam:
This is in reference to IRS Notice Number 972CG dated __________. We respectfully request a waiver of the proposed $__________ penalty for incorrect tax ID numbers.
Acme Inc. has always endeavored to comply with the rules and regulations of the Internal Revenue Service for 1099 Information Reporting. Unfortunately, when we acquired _ in [date], that organization was not in compliance. Specifically, it did not have taxpayer identification numbers for all its reportable vendors. But given the time of the acquisition, we were unable to rectify the situation prior to the reporting deadline.
We have since begun taking actions to assure compliance with IRS for 1099 information returns according to the guidance provided in IRS publication 1586 and the errors described in notice 972CG. We are correcting the acquired records and where necessary sending B-notices to vendors. As is our regular practice, we will utilize the IRS TIN Match program to confirm TINs provided by vendors.
IRM 22.214.171.124.1.2.c indicates that the purpose of penalties is to support the Internal Revenue Service’s mission, which includes, “encouraging voluntary compliance.” Acme Inc. has a record of compliance in information reporting and should not be penalized for circumstances arising from our recent acquisition.
We respectfully request that the proposed penalties be dismissed.
Please contact me if you have further questions. We look forward to hearing your decision.