IRS Letter 853C: What It Means for Your Taxes

Last updated 11/10/2024 by

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Summary:

The IRS issues Letter 853C to inform taxpayers that their request for a penalty waiver or abatement has been denied. This notification usually follows an inquiry or application regarding penalties applied to a taxpayer’s account. Letter 853C explains the IRS’s reasoning for the disallowance and outlines possible next steps for the taxpayer if they disagree with the decision.

Receiving IRS Letter 853C can be concerning, especially if you’ve been trying to resolve a tax-related penalty. This letter is sent when the IRS denies your request for penalty waiver or abatement. Often, taxpayers seek penalty relief if they believe circumstances beyond their control caused delays in tax filing or payment. Letter 853C informs you of the denial and provides guidance on what to do next, including possible steps to dispute or appeal the decision. This article covers everything you need to know about Letter 853C, how to respond effectively, and what options are available if you disagree with the IRS’s decision.

What is IRS Letter 853C?

IRS Letter 853C, titled “Penalty Waiver or Abatement Disallowed,” is issued when the IRS denies a taxpayer’s request for penalty relief. The IRS imposes penalties for a variety of tax-related issues, such as filing late, underpayment, or failing to report income accurately. When taxpayers believe these penalties are unjust or resulted from situations beyond their control—like medical emergencies or natural disasters—they can request penalty relief.

In response, the IRS evaluates the request based on its guidelines, which require a taxpayer to demonstrate reasonable cause. If the IRS finds that the conditions for relief aren’t met, they send Letter 853C to explain the denial. This letter includes the IRS’s rationale, any additional documentation they reviewed, and instructions on what you can do next if you wish to dispute or appeal the decision.

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Why did I receive IRS Letter 853C?

You received Letter 853C because the IRS decided not to grant your penalty waiver or abatement request. Common reasons for disallowance include insufficient evidence supporting your case, lack of reasonable cause, or failure to meet eligibility requirements. Here are some typical reasons the IRS may deny a request:

Insufficient Documentation: If you didn’t provide enough documentation to support your penalty abatement claim, the IRS may deny it.
Reasonable Cause Not Demonstrated: IRS guidelines require proof of reasonable cause, such as unforeseen circumstances or major disruptions. Without this, the request may be denied.
Not Eligible for Penalty Relief Program: Some penalties don’t qualify for relief, or you may have already used a one-time abatement option, making you ineligible.

When issuing Letter 853C, the IRS considers multiple factors, including previous compliance history and whether external circumstances impacted your tax situation. The letter clarifies the specific reason for disallowance and may reference applicable laws or IRS guidelines.

Pro Tip

Set up IRS account alerts online to get real-time notifications on any changes to your tax return or account. This helps you stay updated on adjustments and due dates.

How IRS Letter 853C affects you

When the IRS denies your request for penalty abatement, it means the penalty remains on your account. This can result in:

Additional Financial Burden: Penalties can significantly increase the total tax owed, which may impact your financial situation.
Accruing Interest: Interest may continue to accrue on any unpaid balances, adding to the financial strain.
Potential for Collection Actions: If the balance remains unpaid, the IRS may initiate collection actions, such as wage garnishments or liens on assets.

It’s crucial to understand the denial reasons and assess your options for disputing or paying the penalties. If you believe the decision was incorrect, you can consider appealing or reapplying with stronger documentation.

Steps to take when you receive IRS Letter 853C

Upon receiving Letter 853C, it’s important to carefully review the information and understand the next steps. Here’s a recommended course of action:

Review the Letter: Read through the letter to understand the exact reason for the denial. Look for specific guidance on appealing or providing additional documentation.
Gather Additional Documentation: If you believe the denial was due to insufficient evidence, gather any relevant documents that could strengthen your case, such as medical records, employer letters, or other proof of your circumstances.
Consider Requesting an Appeal: If you disagree with the decision, you can file an appeal. The IRS appeals process allows you to present additional evidence and have your case reviewed by an impartial officer.
Consult a Tax Professional: Navigating an appeal or reapplication can be complex. A tax professional can guide you on improving your request or handling the appeals process effectively.

Acting promptly is crucial to prevent additional penalties or interest from accruing. This also demonstrates to the IRS that you’re taking responsibility for your tax obligations.

Pro Tip

Keep a detailed file of all correspondence and documents related to your penalty abatement request. This will make it easier to provide documentation or appeal if needed.

How to respond to IRS Letter 853C

Steps to dispute the denial decision

If you decide to dispute the denial, you can follow these steps to increase your chances of success:

1. File a Formal Appeal: Use IRS Form 12203, “Request for Appeals Review,” to formally appeal the decision. Attach copies of Letter 853C, your original abatement request, and any additional evidence supporting your case.
2. Include Comprehensive Documentation: Strong documentation is critical. Include proof of reasonable cause, such as medical records, disaster declarations, or employer statements.
3. Contact the Taxpayer Advocate Service (TAS): If you’re facing significant financial hardship due to the penalty, the TAS may be able to help. They offer assistance to taxpayers experiencing difficulties due to IRS actions.

Once your appeal is received, an IRS appeals officer will review the case. They may request further information or schedule a hearing to discuss your situation.

Alternative responses if you’re not disputing

If you choose not to dispute the decision, consider these options:

Pay the Penalty in Full: If possible, pay the penalty to stop additional interest from accruing.
Request a Payment Plan: The IRS offers installment agreements for eligible taxpayers who cannot pay the full balance at once. This helps you manage the debt in monthly payments.
Explore the Offer in Compromise Program: If paying the full penalty would cause severe financial hardship, you may qualify for the Offer in Compromise program, which allows you to settle your debt for less than the full amount owed.

Each option has different eligibility requirements, so consult a tax professional or the IRS’s online resources to determine the best course of action for your situation.

Further support options for addressing IRS Letter 853C

If you’re unsure how to handle the penalty denial, here are some additional resources for support:

Tax Professionals: Certified Public Accountants (CPAs) and tax attorneys can offer advice on disputing or managing the penalty.
IRS Taxpayer Assistance Centers: Local IRS offices provide in-person support and guidance on dealing with penalty notices.
Taxpayer Advocate Service (TAS): TAS assists taxpayers facing financial hardship or unresolved tax issues. They provide free, confidential assistance with complex IRS matters.

These resources can help you navigate the process and ensure you understand your rights and options.

Pro Tip

Consult a tax professional or CPA to strengthen your penalty abatement request. They can help ensure all necessary documents are included and that your case is presented effectively.

Potential penalties or next steps if you don’t respond

Ignoring IRS Letter 853C can lead to serious consequences, including:

Accruing Additional Interest and Penalties: Interest will continue to accrue on any unpaid balance, increasing your debt over time.
Collection Actions: The IRS may begin collection actions, such as wage garnishments, liens, or levies, to collect unpaid balances.
Legal Consequences: In rare cases, ignoring the IRS can lead to court actions or legal enforcement, particularly for large or long-standing debts.

Responding promptly is essential to avoid these outcomes. Whether you choose to appeal, pay, or set up a payment plan, timely action will prevent further complications.

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Frequently asked questions

What is the difference between IRS Letter 853C and other penalty notices?

IRS Letter 853C specifically informs taxpayers that their request for a penalty waiver or abatement has been disallowed. Unlike general penalty notices, which notify taxpayers of a penalty assessment, Letter 853C is issued only after a taxpayer has submitted a request for penalty relief, which the IRS has subsequently denied. This letter also provides information on why the waiver was disallowed and outlines the steps for appeal, whereas other penalty notices may not include appeal instructions.

What type of penalties cannot be abated or waived?

Certain penalties are typically not eligible for abatement or waiver under IRS guidelines. For example, penalties related to fraudulent activity or significant underreporting of income are generally ineligible for relief. Additionally, repeat penalties for the same issue within a specific timeframe may not qualify. It’s best to review IRS guidelines or consult with a tax professional to understand if your specific penalty is eligible for abatement.

What documentation should I include if I choose to appeal?

If you decide to appeal the denial of your penalty abatement request, you should include comprehensive documentation supporting your case. This may include records of medical emergencies, natural disasters, or other unforeseen events that impacted your ability to meet tax obligations. For best results, include official documents such as hospital records, insurance claims, or employer statements verifying the situation. The more thorough your documentation, the stronger your appeal will be.

How long does it take for the IRS to respond to an appeal?

The timeframe for an IRS response to an appeal varies, but it typically takes several weeks to a few months. The IRS appeals process is often complex and may require additional verification or review by an appeals officer. If you have not received a response within a reasonable timeframe, you can contact the IRS or check the status of your appeal through the IRS Taxpayer Advocate Service for further assistance.

Can I apply for an installment agreement if I am unable to pay the penalty?

Yes, if you are unable to pay the penalty in full, you may be eligible for an IRS installment agreement. This allows you to make monthly payments over time to cover the balance. The IRS offers several types of installment agreements depending on the amount owed and your financial situation. Applying for an installment agreement can help prevent further collection actions and reduce the financial burden by spreading payments out over time.

Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.

IRS Letter or Notice Number

Notice Description

CP01	The IRS verified your claim of identity theft and will monitor your account.
CP01H	The IRS received a tax return with a social security number that belongs to a dead person.
CP02H	Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma.
CP03C	You received the First-Time Homebuyer Credit for a house you purchased.
CP04	You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice.
CP08	You may be entitled to additional money due to the Additional Child Tax Credit.
CP10	Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed.
CP10A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP11	You owe money because the IRS amended your return due to a miscalculation.
CP11A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed.
CP11M	Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP12	You are due a bigger refund because the IRS corrected one or more mistakes on your tax return.
CP12A	The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return.
CP12E or CP12F	The IRS corrected a miscalculation on your return.
CP12M	The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return.
CP12R	The IRS made changes to the computation of the Rebate Recovery Credit on your return.
CP13	The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero.
CP13A	The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero.
CP13M	The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero.
CP13R	The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero.
CP14	You owe money on unpaid taxes.
CP16	The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts.
CP21A	You owe money due to the changes you requested that the IRS make on your tax returns.
CP21B	You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks.
CP21C	The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero.
CP21E	As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes.
CP21I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP22A	The IRS made the changes you requested, and you owe money as a result.
CP22E	As a result of your recent audit, the IRS changed your tax return, and you now owe money.
CP22I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP23	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes.
CP24	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP24E	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP25	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero.
CP31	You need to update your address because your refund check was returned to the IRS.
CP45	The IRS was unable to apply your overpayment to your estimated tax as you requested.
CP49	The IRS used all or part of your refund to pay a tax debt.
CP53	Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit.
CP57	The bank declined your payment, so the IRS was unable to draft funds from your bank account.
CP71	A reminder of the amount you owe in tax, penalty, and interest.
CP71A	A reminder of the amount you owe in tax, penalty, and interest.
CP71C	A reminder of the amount you owe in tax, penalty, and interest.
CP71D	A reminder of the amount you owe in tax, penalty, and interest.
CP88	The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax.
CP90	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing.
CP91	The IRS will levy up to 15% of your social security benefits for unpaid taxes.
CP120	The IRS needs documentation of your tax-exempt status.
CP120A	Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years.
CP130	You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed.
CP152	The IRS received your return.
CP153	The IRS will send your refund by mail because your direct deposit did not go through.
CP161	You have an unpaid balance due to the IRS.
CP166	Your monthly payment to the IRS did not go through due to insufficient funds in your bank account.
CP178	You may no longer owe excise tax because your tax return filing requirements changed.
CP231	You need to update your address because your refund was returned to the IRS.
CP259	You did not file the business tax return identified in the notice.
CP259A	You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard).
CP259B	The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259C	The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259D	You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return.
CP259E	You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP259F	The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return.
CP259G	The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.
CP259H	As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP276A	You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time.
CP276B	The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time.
CP297	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP297A	The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP298	The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes.
CP501	You have a balance due on one of your tax accounts.
CP503	You have an unpaid balance on one of your accounts, and the IRS has not heard from you.
CP504	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe.
CP504B	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe.
CP521	A reminder that you have an installment agreement payment due.
CP523	You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets.
CP601	Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas.
CP603	No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas.
CP604	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda.
CP604B	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda.
CP621	Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente.
CP623	Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo.
CP711	Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones.
CP721	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP722	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP771	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP772	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP773	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP774	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP959	Usted no radicó su planilla de contribución de negocios identificada en este aviso.
CP2000	The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due.
CP3219A	The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax.
CP3219N	The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days.
Letter 0012C	The IRS needs additional information to process your tax return.
Letter 0484C	The IRS wants a completed
Letter 0525	Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed.
Letter 531	IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return.
Letter 0668D(LP 68)	The IRS released their levy.
Letter 0549C	Your tax bill was paid.
Letter 0681C	The IRS accepted your payment proposal. However, this is not a formal Installment Agreement.
Letter 0757C	You did not adhere to the terms of your Installment Agreement.
Letter LT 11	The IRS plans to seize your property or rights to property.
Letter 1058	The IRS has not received your payment. It plans to seize your property or rights to property.
Letter 1615 (LT 18)	You must respond to the IRS within 10 days of this notice regarding past due tax returns.
Letter 1737 (LT 27)	Complete and sign Form 433F, Collection Information Statement.
Letter 1961C	Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify.
Letter 1962C	Your application for a
Letter 2050 (LT 16)	The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed.
Letter 2257C	The IRS is providing the payoff amount that you requested.
Letter 226-J	An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP).
Letter 2271C	A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information.
Letter 2272C	An IRS letter explaining why your request to pay the balance due in installments was declined.
Letter 2273C	A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included.
Letter 2318C	A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged.
Letter 2357C	The IRS is admitting that it did not send you the balance due notices that it should have.
Letter 2603C	The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property.
Letter 2604C	The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction.
Letter 2761C	The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer.
Letter 2789C	An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid.
Letter 2840C	Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify).
Letter 3030C	Provides an explanation of the tax, penalty, and interest still due on your account.
Letter 3127C	A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities.
Letter 3174	A reminder of taxes due after the IRS has sent a Notice of Intent to Levy.
Letter 3217C	The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify).
Letter 3228 (LT 39)	A request to pay the balance due within 10 days using the envelope provided.
Letter 3500	The IRS has received your documents, and it needs additional time to review them.
Letter 3572	Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment.
Letter 4883C	The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately.
Letter 4903 (LT 26)	You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response.
Letter LP 47	The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address.
Letter LP 59	The IRS has not received a response to the notice of levy it previously sent.
Audit Letter 2205	The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit).
Letter 915	You recently underwent an audit, and the IRS informs you that you now owe taxes.

Key takeaways

IRS Letter 853C informs taxpayers of a denied penalty abatement request.
Common reasons for denial include insufficient documentation and lack of reasonable cause.
Options include appealing the decision, reapplying with stronger evidence, or setting up a payment plan.
Ignoring the letter may lead to additional penalties, interest, or IRS collection actions.

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