Representation before the IRS · Representing a taxpayer in the collection process

Adjustments to the taxpayer's account (e.g., abatements and refund offsets)

Two different things get called an adjustment. An abatement removes an assessment the IRS should not have made or should not collect. An offset takes a refund the taxpayer is owed and applies it somewhere else. The first is discretionary in most of its forms and mandatory in a few; the second is mandatory in every form and, unusually in tax practice, cannot be challenged in any court.

The rule

Abatement authority. The Secretary is authorized to abate the unpaid portion of an assessment which is excessive in amount, assessed after the limitation period expired, or erroneously or illegally assessed (IRC § 6404(a)). Note the shape: it reaches the unpaid portion of an assessment, so it is not a route to get money back — that is a refund claim.

But no claim may be filed for the main taxes. No claim for abatement may be filed by a taxpayer in respect of an assessment of any tax imposed under subtitle A or B — income, estate and gift taxes (IRC § 6404(b)). The taxpayer’s route for those is a refund claim under § 6511, not an abatement request. Abatement of income tax happens, but on the IRS’s own motion.

Small balances. The Secretary may abate where administration and collection costs would not warrant collection of the amount due, under uniform rules (IRC § 6404(c)).

Interest on IRS errors and delays. The Secretary may abate interest on a deficiency attributable to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act — but only where no significant aspect of the error or delay is attributable to the taxpayer, and only after the IRS has contacted the taxpayer in writing about the deficiency or payment (IRC § 6404(e)(1)).

Erroneous written advice. The Secretary shall abate any penalty or addition to tax attributable to erroneous advice furnished in writing by an IRS officer or employee acting officially — but only where the advice was reasonably relied upon and was in response to a specific written request of the taxpayer, and the penalty did not result from the taxpayer failing to provide adequate or accurate information (IRC § 6404(f)). This one is mandatory.

Suspension where the IRS goes quiet. For an individual who filed on time, if the IRS does not provide a notice specifically stating the liability and the basis for it within 36 months from the later of the filing date or the unextended due date, for an individual who filed on time, after which interest and time-sensitive penalties are suspended until 21 days after the IRS gives notice^TY2026, interest and time-sensitive penalties are suspended for the suspension period — which ends 21 days after that notice is given (IRC § 6404(g)(1), (g)(3)). It applies separately to each item or adjustment, and does not apply to the § 6651 failure-to-file penalty, to fraud cases, to amounts shown on the return, or to gross misstatements (IRC § 6404(g)(2)).

Offsets, and their order. On any overpayment the Secretary may credit it against any internal revenue tax liability of the person who made it and shall refund the balance — subject to four mandatory offsets (IRC § 6402(a)). The sequence is internal revenue tax first, then past-due child support, then debts owed to federal agencies, then past-due state income tax, then covered unemployment compensation debts^TY2026: past-due child support (§ 6402(c)), debts owed to federal agencies (§ 6402(d)), past-due state income tax (§ 6402(e)), and covered unemployment compensation debts (§ 6402(f)). Each is triggered by notice from the State or agency, and in each the IRS shall reduce and remit.

No review, anywhere. No court of the United States has jurisdiction to hear any action, legal or equitable, brought to restrain or review a reduction under § 6402(c), (d), (e) or (f), and no such reduction is subject to administrative review by the Secretary (IRC § 6402(g)). The dispute belongs with the agency that certified the debt.

Disallowance must be explained. On disallowing a refund claim the Secretary shall provide the taxpayer with an explanation (IRC § 6402(l)).

Current figures

How it works in practice

The § 6404(b) bar is the point practitioners most often miss. A client whose income tax assessment is wrong cannot file a claim for abatement of it. The mechanism is a refund claim — pay and claim under § 6511, or an audit reconsideration if the assessment came from an examination the client never engaged with. Sending an abatement request for income tax invites a response that reads as a refusal on the merits and is actually a refusal on the form.

Section 6404(f) is the one abatement the IRS must grant, and its conditions are narrow enough that most claims fail on them rather than on the advice. All four have to hold: written advice, from an IRS employee acting officially, in response to the taxpayer’s specific written request, reasonably relied on, and not undermined by the taxpayer’s own incomplete information. A telephone call is outside it. So is written advice the client did not ask for in writing.

Offsets are not a collection action and carry none of the protections of one. There is no notice of intent, no CDP right, no Appeals route, and § 6402(g) closes the courts. The only real answers are to resolve the underlying debt with the agency that certified it, or — where the taxpayer is not the debtor — Form 8379, Injured Spouse Allocation, which recovers a spouse’s share of a joint overpayment applied to the other spouse’s past-due obligation.

Internal revenue tax comes first. Section 6402(a) lets the IRS apply an overpayment against its own tax liabilities before the § 6402(c) to (f) offsets operate, which is why a client with both an IRS balance and a child support arrearage sees the refund go to the IRS first. That ordering surprises clients who assume the family court order outranks everything.

The § 6404(g) suspension rewards the compliant. It applies only to an individual who filed on time, it runs item by item, and it is switched off for the failure-to-file penalty and for amounts shown on the return. Where a client filed a correct return and heard nothing for three years before an adjustment arrived, the interest for the silent period is worth computing rather than accepting.

How this has changed

Most of the protective provisions here arrived in the 1990s. Section 6404(e)‘s interest abatement was widened by the Taxpayer Bill of Rights 2 in 1996 from “ministerial” acts alone to ministerial or managerial acts, which materially enlarged it, and the same Act added § 6404(f)‘s mandatory abatement for erroneous written advice. Section 6404(g)‘s suspension where the IRS fails to contact the taxpayer came from the Restructuring and Reform Act of 1998; the period was originally 18 months and was lengthened to 36 months, so older material understates how long the IRS may be silent before the suspension begins. The offset provisions have accreted in the opposite direction — § 6402(f)‘s unemployment compensation offset is the most recent addition to a list that began with child support alone.

Exam focus

That a taxpayer may not file a claim for abatement of subtitle A or B tax, and what the alternatives are. The two mandatory items: § 6404(f) erroneous written advice, with all four of its conditions, and the four § 6402 offsets. The order in which an overpayment is applied, beginning with internal revenue tax. That § 6402(g) forecloses judicial and administrative review of an offset. The distinction between Form 8379 and innocent spouse relief. Expect § 6404(e)‘s ministerial-or-managerial standard and its no-significant-taxpayer-fault condition.

Check yourself

1. A taxpayer wishes to have an income tax assessment abated. He: (A) Files a claim for abatement under § 6404(a) (B) May not file a claim for abatement of subtitle A tax; the routes are audit reconsideration or a refund claim (C) Files Form 843 (D) Petitions the Tax Court for abatement Answer: B. IRC § 6404(b).

2. Abatement of a penalty attributable to erroneous IRS advice is mandatory where the advice was: (A) Given by telephone and documented (B) In writing, in response to the taxpayer’s specific written request, reasonably relied upon, and not undermined by inadequate information from the taxpayer (C) Given by any government employee (D) Later published as guidance Answer: B. IRC § 6404(f).

3. A taxpayer’s overpayment is offset against a past-due state income tax obligation. He may challenge the offset: (A) In the Tax Court (B) In a district court (C) Through Appeals (D) Nowhere; no court has jurisdiction and there is no administrative review — the dispute lies with the certifying State Answer: D. IRC § 6402(g).

4. An overpayment is applied first against: (A) Past-due child support (B) Any internal revenue tax liability of the person who made the overpayment (C) Debts owed to federal agencies (D) State income tax obligations Answer: B. IRC § 6402(a).

5. A joint refund is taken for one spouse’s pre-marital federal student loan debt. The other spouse should file: (A) Form 8857, Request for Innocent Spouse Relief (B) Form 8379, Injured Spouse Allocation (C) Form 843 (D) Form 1040-X Answer: B. The issue is whose share of the refund it was, not who is liable for a tax.