The statute and its three conditions
IRC 6404(f)(1): “The Secretary shall abate any portion of any penalty or addition to tax attributable to erroneous advice furnished to the taxpayer in writing by an officer or employee of the Internal Revenue Service, acting in such officer’s or employee’s official capacity.” The duty is mandatory; the IRM lists IRC 6404(f) among statutory exceptions, which come ahead of administrative waivers and reasonable cause in the relief order (IRM 20.1.1.3.3.1).
Treas. Reg. 301.6404-3(b)(1) sets three conditions:
- The written advice was reasonably relied on by the taxpayer.
- The advice was issued in response to a specific written request for advice by the taxpayer.
- The taxpayer provided adequate and accurate information.
The relief covers penalties and additions to tax, including interest on them, but not the tax itself or the interest on the tax (Treas. Reg. 301.6404-3(c)(2) and Example 1). For abatement of interest on tax caused by IRS error or delay, see interest abatement.
What counts as advice
A written response is advice “if, and only if, the response applies the tax laws to the specific facts submitted in writing by the taxpayer and provides a conclusion regarding the tax treatment to be accorded the taxpayer upon the application of the tax law to those facts” (Treas. Reg. 301.6404-3(c)(1)). Example 2 of the regulation shows the line: an IRS response that sent the taxpayer the relevant Code sections, regulations and a publication, but gave no opinion on whether the activity was passive, is not advice.
General publications, form instructions and responses that only restate the law will not support 6404(f). They may still matter to a reasonable cause argument.
Reasonable reliance and its limits
| Situation | Rule in Treas. Reg. 301.6404-3(b)(2) |
|---|---|
| Advice on a return item received after the return was filed | Not reasonable reliance, unless the taxpayer then files an amended return conforming to the advice |
| Advice not tied to a return item (for example, estimated tax payments) received after the act or omission | Not reasonable reliance |
| Advice on a continuing action or series of actions | Reliance continues until the taxpayer is put on notice that the advice no longer reflects the IRS position |
| Events that put the taxpayer on notice | IRS correspondence saying so; new legislation or treaty ratification; a Supreme Court decision; temporary or final regulations; a revenue ruling, revenue procedure or other statement in the Internal Revenue Bulletin |
IRM 20.1.1.3.3.4 restates these rules for employees and adds the two questions they ask: was the advice in response to a specific request about the facts in that request, and did the taxpayer reasonably rely on it. Relief also fails for any portion of the penalty that resulted from inadequate or inaccurate information, and “The Service has no obligation to verify or correct the taxpayer's submitted information” (Treas. Reg. 301.6404-3(b)(4)).
The written request and representatives
A representative's written request counts as the taxpayer's only if the representative is an attorney, CPA, enrolled agent, enrolled actuary or other person permitted to practice before the IRS and not suspended or disbarred, and the request either includes a power of attorney signed by the taxpayer covering the request or one is already on file (Treas. Reg. 301.6404-3(b)(3)). When a representative writes to the IRS for a determination a client will rely on, have a Form 2848 in place first and keep a copy of the full request.
Claiming relief on Form 843
- Complete Form 843 lines 1 to 4. On line 3, enter the payment date if the penalty has been paid.
- On line 6, enter the Code section of the assessed penalty.
- On line 7, check box b: “A penalty or addition to tax was the result of erroneous written advice from the IRS.”
- The regulation also says to write “Abatement of penalty or addition to tax pursuant to section 6404(f)” at the top of the form and to state whether the penalty has been paid.
- Attach copies of the written request for advice, the erroneous written advice relied on, and any report of tax adjustments identifying the penalty and the item relating to the advice.
- Send it to the service center where the return was filed. If the advice did not relate to a return item, send it to the service center where the return was filed for the year the taxpayer relied on the advice (Treas. Reg. 301.6404-3(d)).
Sources: Form 843 instructions (Rev. Dec. 2024), Requesting Abatement or Refund of a Penalty or Addition to Tax as a Result of Written Advice; Treas. Reg. 301.6404-3(d). The IRM adds that Form 843 is generally required, but if the information shows abatement is warranted, “the penalty should be abated, whether or not a Form 843 is provided” (IRM 20.1.1.3.3.4). See Form 843.
Deadline. The request must be submitted within the period allowed for collecting the penalty, or, if it has been paid, within the period for claiming a credit or refund (Treas. Reg. 301.6404-3(e); IRM 20.1.1.3.3.4.1). See the collection statute and refund claims for paid penalties.
Oral advice from the IRS
The statute covers only written advice, but “Administratively, the IRS has extended this relief to include erroneous oral advice when appropriate,” for penalties that allow reasonable cause relief (IRM 20.1.1.3.3.4.2). The IRM tells employees to consider whether the taxpayer exercised ordinary business care in relying on the advice, whether the situation clearly matched the advice and the penalty, the taxpayer's history and experience, and whether the IRS provided correct information elsewhere, such as in forms and publications.
The evidence the IRM lists is the practical checklist for any client who relied on what an IRS employee said on the phone:
- a notation of the taxpayer's question to the IRS;
- documentation of the advice given;
- the office and method by which the advice was obtained;
- the date of the advice; and
- the name of the employee who gave it.
Notes of IRS calls made at the time, with the date, the employee's name, and what was asked and answered, map directly onto that list.
Advice from a tax professional
Reliance on a private advisor is not a 6404(f) claim. The IRM says it “generally relates to the reasonable cause exception in IRC 6664(c) for the accuracy-related penalty”, and for other penalties applies only in limited cases involving technical or complicated substantive issues. “The taxpayer’s responsibility to file, pay, or deposit taxes generally cannot be excused by reliance on the advice of a tax advisor” (IRM 20.1.1.3.3.4.3). See the accuracy-related penalty for the Treas. Reg. 1.6664-4(c) standard.
Three kinds of advice compared
| Source of advice | Basis for relief | What must be shown | Authority |
|---|---|---|---|
| IRS, in writing, answering a specific written request | Statutory exception; abatement is mandatory | Reasonable reliance, adequate and accurate facts, advice applying law to the facts | IRC 6404(f); Treas. Reg. 301.6404-3 |
| IRS, orally | Administrative extension, only where the penalty allows reasonable cause | Ordinary business care in relying, a clear link between the advice and the penalty, documentation of the call | IRM 20.1.1.3.3.4.2 |
| Private tax advisor | Reasonable cause | For the accuracy-related penalty, the Treas. Reg. 1.6664-4(c) requirements; for other penalties, a technical issue and full facts given | IRC 6664(c); IRM 20.1.1.3.3.4.3 |
The first row is the strongest because the IRS has no discretion once the conditions are met, which is why keeping the written request and response matters. The third row cannot excuse a failure to file, pay or deposit on its own.
When 6404(f) does not fit
A client who relied on IRS advice but misses one of the three conditions can still seek relief under reasonable cause, if the IRS determines the reliance showed ordinary business care and prudence (IRM 20.1.1.3.3.4.1; IRM 20.1.1.3.2.2.5). See reasonable cause.
The estimated tax penalty is the exception: erroneous IRS advice supports the IRC 6654(e)(3)(A) waiver only if it falls within IRC 6404(f) and Treas. Reg. 301.6404-3 (IRM 20.1.3.3.2.1.2). See the estimated tax penalty.
Questions practitioners ask
Does advice from an IRS phone assistor qualify under 6404(f)?
No, the statute and regulation require written advice in response to a specific written request. The IRS has extended relief administratively to erroneous oral advice for penalties that allow reasonable cause, judged on the factors and documentation listed in IRM 20.1.1.3.3.4.2.
Does 6404(f) remove the tax or the interest on the tax?
No. It abates penalties and additions to tax, including interest on those penalties. Example 1 in Treas. Reg. 301.6404-3 says the erroneous advice does not affect the tax or the interest on it.
Can a representative make the written request?
Yes, if the representative is an attorney, CPA, enrolled agent, enrolled actuary or other person allowed to practice before the IRS, and a signed power of attorney covering the request is attached or on file, per Treas. Reg. 301.6404-3(b)(3).
What if the advice arrived after the return was filed?
Reliance is not reasonable for advice on a return item received after filing, unless the taxpayer files an amended return that conforms to the advice, per Treas. Reg. 301.6404-3(b)(2)(ii) and (iii).
How long does a client have to ask?
Within the period for collecting the penalty, or, if the penalty was paid, within the period for claiming a credit or refund, under Treas. Reg. 301.6404-3(e).
Is Form 843 mandatory?
The regulation tells taxpayers to use Form 843, and the IRM says it is generally required, but IRM 20.1.1.3.3.4 also says the penalty should be abated if the information shows abatement is warranted, whether or not a Form 843 is provided.