How to Handle an IRS Dishonored Payment Penalty Under Code Section 6657

Having dealt with these issues before, I can help walk you through the process. For a dishonored payment penalty under Section 6657, you'll need to submit a penalty abatement request letter with supporting documentation. First, you should definitely include a copy of your bank statement showing sufficient funds were available when the payment was supposed to process. Address your letter to the same IRS address shown on your CP14 notice. In your letter, clearly explain that you had sufficient funds, include your bank statement as proof, and reference that you promptly paid the full amount once you discovered the issue. As for whether to pay the penalty first - I generally recommend paying it to stop additional interest from accruing. The IRS will refund the amount if they approve your abatement request. Make sure you reference your tax year, Social Security number, and the specific notice (CP14) in your letter.

After dealing with a similar situation last year, I found a service called taxr.ai (https://taxr.ai) that was super helpful with my penalty abatement letter. I was also hit with a dishonored payment penalty even though I had funds in my account. I uploaded my CP14 notice and bank statements to taxr.ai and they generated a professional abatement request letter specifically addressing the Section 6657 penalty. What I liked was that they highlighted exactly what parts of my bank statement proved I had sufficient funds. My penalty was removed within about 5 weeks. Much easier than trying to figure out all the legal terminology myself!

I tried taxr.ai after seeing the recommendation here and it worked amazingly well! I was stressed about writing a formal letter for my dishonored payment penalty under Section 6657, especially since I'm terrible with legal jargon. The process was super easy - I uploaded my CP14 notice and my bank statements showing I had enough funds when the payment was supposed to process. Within a day, they provided a professionally written letter that cited relevant IRS regulations and highlighted the exact evidence from my bank statements. I sent it to the address on my notice, and 4 weeks later got confirmation that my penalty was removed! The letter was much more detailed and convincing than anything I could have written myself. Definitely worth checking out if you're in the same situation.

If you're still struggling to get through to the IRS about your Section 6657 penalty, I had a similar situation and discovered Claimyr (https://claimyr.com) after waiting on hold for hours. I was trying to get more information about exactly why my payment was marked as dishonored when I had plenty of funds. Claimyr got me connected to an actual IRS agent in about 20 minutes instead of the 2+ hours I was experiencing before. They have a cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c. The agent I spoke with was able to tell me exactly what happened with my payment (turns out my bank's routing number was recorded incorrectly) and gave me specific instructions for my abatement letter.

I need to apologize and correct myself. After posting my skeptical comment, I decided to try Claimyr out of desperation because I'd been trying to reach the IRS for DAYS about my Section 6657 penalty. I was absolutely shocked when they got me through to an IRS agent in about 25 minutes. The agent was able to explain that my dishonored payment happened because of a digit transposition in my account number (completely my fault). She walked me through exactly what to include in my abatement request letter and where to send it. I would have spent another day on hold without this service. Sometimes being proven wrong is actually a good thing! Already sent in my letter with the information the agent provided.

Don't forget to include IRS Form 843 (Claim for Refund and Request for Abatement) with your letter! I had a similar issue with a dishonored payment penalty and my first attempt was rejected because I didn't include this form. The letter alone isn't always enough for Section 6657 penalties.

Has anyone successfully had this penalty removed? I'm in the same boat with a Section 6657 penalty. My payment was rejected because my bank was doing system maintenance during the exact window when the IRS tried to process it (just my luck). I've already mailed my letter with bank statements 3 weeks ago but haven't heard anything back.

Pro tip: If you decide to pay the penalty while waiting for abatement (which I recommend to stop interest), make sure to clearly mark your payment as "Section 6657 Penalty Payment" so it doesn't get applied to next year's taxes or something else. I learned this the hard way when my penalty payment got misapplied and created another headache.

I went through this exact same situation last year and successfully got my Section 6657 penalty removed! Here's what worked for me: 1. **Write a clear, professional letter** explaining that you had sufficient funds when the payment was supposed to process. Include your name, SSN, tax year, and the CP14 notice number. 2. **Attach bank statements** showing your account balance on the date the payment was supposed to be processed. Highlight the relevant dates and amounts. 3. **Include Form 843** as others mentioned - this is crucial for the formal abatement request. 4. **Send everything to the address on your CP14 notice** via certified mail so you have proof of delivery. 5. **Consider paying the penalty now** to stop interest from accruing. If approved, they'll refund it with interest. In my case, it took about 6 weeks to get a response, but they removed the penalty completely. The key is showing you had sufficient funds and that the payment failure wasn't due to your negligence. Since you can prove you had adequate funds and immediately paid when you discovered the issue, you have a strong case. Don't give up - these penalties can definitely be removed with proper documentation!

I went through this exact same situation with a Section 6657 penalty last year! The frustration is real when you know you had the funds but the payment somehow failed to process. Here's what worked for me: I wrote a detailed letter explaining that I had sufficient funds available when the payment was supposed to process, included copies of my bank statements showing the account balance on that date, and attached Form 843 (Claim for Refund and Request for Abatement) as the formal request mechanism. The key is being very specific about dates and amounts. In my letter, I highlighted the exact date the payment was supposed to process, the account balance on that date, and when I discovered the issue and made the payment successfully. I also mentioned that I filed my return on time and that the payment failure was not due to any negligence on my part. I sent everything via certified mail to the address on my CP14 notice and paid the penalty upfront to stop interest from accruing. It took about 7 weeks, but they completely removed the penalty and refunded the amount I had paid. Don't get discouraged - these penalties are definitely removable when you can prove you had sufficient funds and acted promptly to resolve the issue once you became aware of it!

I just went through this exact same penalty abatement process for a Section 6657 dishonored payment penalty and wanted to share what worked for me! Like you, I had sufficient funds in my account when the IRS tried to process my payment, but something went wrong on their end. Here's the approach that got my penalty completely removed: **My successful strategy:** 1. **Paid the penalty immediately** to stop interest from accumulating (they'll refund it if approved) 2. **Used Form 843** as the official abatement request mechanism - this is critical 3. **Wrote a concise but detailed letter** explaining the situation, referencing my SSN, tax year, and CP14 notice number 4. **Included highlighted bank statements** showing my account balance exceeded the payment amount on the processing date 5. **Sent everything certified mail** to the address on my CP14 notice The key was being factual and specific about dates while keeping the letter professional and to the point. I emphasized that I had sufficient funds, filed on time, and paid immediately upon discovering the issue - basically proving it wasn't due to my negligence. It took about 6 weeks to get approval, but they removed the penalty entirely and refunded what I had paid. Don't lose hope - these situations are more common than you'd think with electronic payments, and the IRS is generally reasonable when you can document that you had the funds available.

I went through this exact situation last year and successfully got my Section 6657 penalty removed! The process can be frustrating, but it's definitely doable when you have the right documentation. Here's what I learned from my experience: The IRS is actually pretty reasonable about these penalties when you can clearly demonstrate that the payment failure wasn't due to insufficient funds or negligence on your part. Since you filed on time, had adequate funds, and paid immediately once you discovered the issue, you have a strong case. For the letter itself, keep it professional but straightforward. Start with your identifying information (name, SSN, tax year, CP14 notice number), clearly state that you're requesting abatement of the Section 6657 penalty, and explain that you had sufficient funds when the payment was supposed to process. Include the date your payment was supposed to go through and the date you successfully made the payment once you discovered the issue. The bank statements are crucial - make sure they clearly show your account balance on the date the IRS attempted to process your payment. I'd also recommend including Form 843 (Claim for Refund and Request for Abatement) as the formal mechanism for your request. Regarding payment timing, I'd suggest paying the penalty now to stop interest from accruing. The IRS will refund it with interest if they approve your abatement request. Send everything via certified mail to the address on your CP14 notice. In my case, it took about 7 weeks to get a response, but they completely removed the penalty. Stay patient and persistent - you've got this!