Ezel / IRS Rulings / 201111012

CCA 201111012: IRS cannot abate an agreed assessment to impose a fraud penalty

Number
201111012
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Assessments: Abatement
Topics
Income and deductions
Code sections
§ 6404, § 6663, § 6110
Ruling dated
February 17, 2011
Publicly released
March 18, 2011
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2011
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advice considered whether the IRS could abate an assessment after a taxpayer agreed to pay it, in order to assess a fraud penalty. The memorandum concluded that the IRS's abatement authority is limited to the circumstances listed in section 6404(a), none of which applied. It also concluded that without an abatement there would be no underpayment of tax, a prerequisite for the fraud penalty under section 6663(a). The advice therefore rejected the proposed abatement and penalty sequence.

Ruling snapshot

  • Question: Could the IRS abate an agreed assessment so that it could impose a fraud penalty?
  • Outcome: Advice given.
  • Key authorities: IRC §§ 6404(a), 6663(a), and 6110.

Full text (IRS public release)

ID: CCA-217310-11
Number: 201111012
Release Date: 3/18/2011
Office: ------------
UILC: 04.01.00-00

From:--------------------
Sent: Thursday, February 17, 2011 3:10 PM
To: -------------------------
Cc: -------------------
Subject: Abatement question

This documents our telephone conversation of this morning, in which I responded to your earlier question of whether the IRS can abate an assessment, following the taxpayer's agreement to pay the assessed amount, so that the IRS can assess a fraud penalty against the taxpayer. You requested that I summarize my conclusions in an e-mail.

As discussed, I do not believe that the IRS has authority to abate under these circumstances. The circumstances under which the IRS can abate a tax are limited to those enumerated in IRC 6404(a), none of which exists in your case. Moreover, because there will be no "underpayment of tax" unless the liability is abated, the IRS cannot impose the fraud penalty under IRC 6663(a), which requires an underpayment of tax for assessment.

You indicated that you agreed with my analysis. However, if you wish to discuss this further, please feel free to call or e-mail me.

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