Form 843

Form 843, officially titled “Claim for Refund and Request for Abatement,” is a tax form used in the United States to request an abatement of certain types of taxes, penalties, and interest, or to claim a refund for them. It is a relatively less known form but serves an important function in the U.S. tax system for those seeking relief from specific erroneous or unjust tax assessments.

Purpose of Form 843

Form 843 can be used for the following purposes:

1. Requesting Abatement of Penalty or Addition to Tax: This can include penalties for failure to file, failure to pay, estimated tax penalties, or executor penalties, among others.
2. Requesting Abatement of Interest Due to IRS Errors or Delays: If the interest on tax due is a result of an IRS error or delay in performing certain functions, this interest may be abated.
3. Claiming a Refund of Certain Assessed Taxes: This usually applies to taxes that were paid erroneously or are being contested.
4. Requesting Abatement of Other Specified Penalties or Interest as Part of a General Administrative Claim: Based on unique circumstances that warrant abatement that are not covered under other forms.

When to Use Form 843

Form 843 should be used when a taxpayer believes that:

• They were unjustly penalized.
• There was an error in tax assessments.
• There is a valid reason for reducing or refunding interest or penalties.
• There is eligibility for special relief provided by the IRS.

Types of Penalties and Interest Covered

1. Penalties Related to Failure to File: Monetary penalties for failing to submit tax returns on time.
2. Penalties for Underpayment of Tax: This could include underpayment of income tax, self-employment tax, or other types of taxes.
3. Estimated Tax Penalties: Penalties incurred for underpaying estimated taxes throughout the year.
4. Information Return Penalties: Penalties for failure to file correct information returns, such as 1099 forms.
5. Other IRS Imposed Penalties: This includes automatic penalties for late filings or specific misreporting that could be subject to abatement.

Interest abatement can be requested if it’s attributable to an unreasonable error or delay by the IRS in performing its official duties, generally regarding taxable years starting after July 30, 1996.

Filing Instructions

Step-by-Step Guide:

1. Download and Print Form 843: The form is available on the IRS website here.
2. Complete the Identifying Information:
   • Taxpayer’s name, address, and identifying number (social security number or employer identification number).
   • Spouse’s information if filing jointly.
3. Explain the Reason for the Request:
   • Specify the tax year(s) involved.
   • Details regarding the erroneous penalty or interest.
   • Section marking for abatement or refund.
4. Sign and Date:
   • The taxpayer or an authorized representative should sign.
   • Include the date of completion.

Supporting Documentation

To bolster claims, include documents such as:

• IRS Notices: Any communication received pertaining to the penalty or interest.
• Proof of Payment: Checks, bank statements, or receipts.
• Statements Explaining Circumstances: Written testimonials or reasons for errors or delays which were beyond taxpayer control.

Where to File

Form 843 should be mailed to the IRS service center where the original tax return was filed, or to the specific address provided in IRS communications regarding the penalty or interest.

Timeline

Generally, taxpayers should file Form 843 within:

• Two years after the date of the tax payment being contested.
• Three years from the date the original return was filed if claiming a refund.

Common Scenarios for Filing Form 843

1. Abatement of Penalties Due to Reasonable Cause: This includes situations where taxpayers could not comply due to disasters, theft, illness, or other incapacitating events.

2. Interest Abatement Due to IRS Error: If the IRS misapplied payments or caused undue delays in processing.

3. Requesting Refunds for Overpaid Taxes: When it’s discovered taxes were calculated or paid incorrectly.

4. Incorrect Adjustments: If the IRS adjusted returns incorrectly, leading to undue penalties or interest.

5. Estimated Tax Penalty Issues: When there’s a valid exception to the penalty or a specific reason why estimated taxes may not have been paid on time.

Special Considerations

1. IRS Error Penalty and Interest Abatement: The IRS can generally abate interest on tax debts attributable to delays in performing ministerial or managerial acts.

2. Filing on Behalf of Deceased Taxpayers/Estates: Representatives must include proof of their authority, such as Form 56, Notice Concerning Fiduciary Relationship.

3. Professional Help: Sometimes, it may be best to consult a tax professional or attorney to ensure proper completion and submission of Form 843, particularly in complex cases or large penalties.

Conclusion

Form 843 provides taxpayers a legal avenue to dispute and rectify unfair tax burdens including penalties and interest. Understanding its purpose, how to file it, and the necessary documentation is crucial for achieving a successful outcome. Proper use of Form 843 can lead to significant financial relief and rectify improper tax assessments, allowing taxpayers to amend errors and face less punitive financial consequences.