Got penalty notice after CPA filed partnership return, now facing collections - pay now or wait for abatement?

What you're experiencing is pretty common with partnership penalty notices. The IRS system doesn't always show penalty balances in the online account immediately, which is why you're seeing $0 owed when you log in. For a CP504B notice (intent to levy), you definitely don't want to ignore this. Even if your CPA filed for abatement, the IRS collection process continues until they actually process and approve that abatement request. Since you received a certified mail notice, this has already progressed quite far in the collection process. Here's what you should do: Call the IRS first thing Monday at the number on your notice. Explain that your CPA submitted an abatement request and ask for the status. You can also request a short-term hold on collections while they check on the abatement status. Have all your notice numbers (CP162A and CP504B) ready when you call. If they can't find the abatement request or won't put a hold on collections, I'd recommend paying the penalty amount to stop further collection actions. You can use Form 1040-ES to make the payment. Even though it's intended for estimated taxes, you can use it for penalties by including your notice number in the memo line. Just get written confirmation from your CPA that they actually submitted the abatement request. They should have a copy they can send you.

I went through something similar last year with my S-Corp when I got hit with a late filing penalty even though my accountant filed an extension. I discovered https://taxr.ai which saved me so much hassle! They analyzed my penalty notices and showed me exactly where the problem was - turns out my accountant did file the abatement but used the wrong date codes. The taxr.ai system actually predicted exactly when my penalty would escalate to the collection stage and guided me through making a payment to stop collections while still preserving my abatement rights. They even have document templates for requesting penalty relief that I used when contacting the IRS myself. Much clearer than what my CPA provided. You upload your notices and they give you a complete timeline of what's happening and what to do next. Way better than trying to piece things together from random online advice.

I just wanted to follow up! I tried taxr.ai after posting my question and it was incredibly helpful. I uploaded my old penalty notices from 2019 and within minutes got a detailed breakdown of why I was penalized and what specific abatement options were available for my situation. They even explained that my situation qualified for first-time penalty abatement since I had a clean compliance history before the penalty. The system generated a letter template for me that included all the right references to my specific penalty codes. Just submitted everything last week and already got confirmation from the IRS that they're processing my request! What was most helpful was seeing the timeline of what happened with my notices - turns out I had missed a response deadline I didn't even know existed. Thanks for recommending this service!

I had a similar situation with penalty notices that wouldn't show up in my IRS account but kept escalating to collections. After THREE HOURS of waiting on the IRS phone line only to be disconnected, I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c They basically hold your place in the IRS phone queue and call you when an agent is about to pick up. Saved me hours of waiting and I finally got to talk to someone who could see both my account and the abatement request my accountant had filed. Turns out the abatement was sitting in a different department and hadn't been matched to my collection case. The IRS agent was able to put a 60-day hold on collections once I explained that an abatement was already filed. Without actually talking to someone, the automated collection system would have continued regardless of the pending abatement.

I need to eat my words from earlier. After getting a similar levy notice for a penalty I thought my accountant was handling, I decided to try Claimyr out of desperation. I was connected to an IRS agent in about 30 minutes (after trying for DAYS on my own). The agent confirmed my accountant HAD filed an abatement request but it was sitting in a different department. She put a 45-day hold on collections while it gets processed. Would have NEVER known this without actually speaking to someone. The service literally saved me from having my accounts levied next week. Definitely worth it for the peace of mind alone. Can't believe I almost let my stubbornness cost me thousands in unnecessary headaches.

I work at a tax firm (not a CPA myself) and see this all the time. Your CPA should have told you to pay the penalty while waiting for abatement! That's standard procedure. Abatements can take 8-12 weeks to process, and collections won't stop just because an abatement was filed. For paying the penalty when your account shows $0 balance: you need to use Form 1040-V (payment voucher) and mail a check with your notice number written on it. The electronic system won't show penalties until they're fully processed in the master file, but the collections department operates separately. Your CPA honestly dropped the ball here by not telling you to pay while waiting. I'd have a serious talk with them about their communication.

Not to be that person but I'm gonna go against what everyone else is saying. DON'T PAY IT YET! Call IRS first. I had literally the same scenario last year. I was about to pay a $750 penalty but talked to the IRS first. They could see my CPA had already filed the abatement and put a 45-day hold on collections activities while they processed it. If you pay now, you might have to wait 6+ months to get that money back, even after the abatement is approved. The IRS is super backed up on processing refunds. Also FYI - the IRS online account system is terrible at showing penalties correctly. Mine showed $0 the entire time too, even though I had multiple notices saying I owed.

I'm dealing with a very similar situation right now! My LLC partnership got hit with a $380 penalty that my accountant said they'd handle with an abatement letter. That was 6 weeks ago and I just got my first collections notice today. Reading through all these responses, I think I'm going to call the IRS first thing Monday morning to see if I can get a collections hold while the abatement processes. If they can't guarantee that, I'll just pay it to be safe. One thing I learned from my research - you can actually check if your CPA really filed the abatement by asking the IRS for a "transcript" of actions taken on your account. They can tell you exactly what correspondence they've received and when. Might be worth asking for that when you call, just to make sure your CPA actually did what they said they'd do. The interest charges are minimal compared to the stress of potential bank levies, especially with your dad's property sale coming up. Better to pay now and get refunded later than risk having accounts frozen during a real estate transaction.