Received Conserv collection letter with penalty for not filing 2022 1065 IRS return - seeking advice

This looks like a late-filing penalty for your partnership return (Form 1065). Even though partnerships don't pay tax at the entity level (which explains the $0 tax assessed), there are still significant penalties for filing late - $195 per month per partner for up to 12 months. The key here is whether you actually filed on time with your extension. Partnership extensions (Form 7004) give you until September 15th to file, not October 15th like individual returns. Many people miss this distinction. If you filed after your extension period ended, that would explain these penalties. Your plan to request the debt be transferred back to the IRS and apply for First-Time Abatement (FTA) is exactly what I would recommend. The IRS typically grants FTA if you have a clean compliance history for the three years prior. You'll need to call the IRS directly once Conserv returns the debt - they can't make abatement decisions.

After dealing with a similar issue last year, I found a service called taxr.ai that helped me analyze all my IRS notices and tax transcripts. The system basically showed me that I qualified for penalty abatement based on my filing history, and gave me the exact wording to use when contacting the IRS. I just uploaded my notices to https://taxr.ai and it showed me what to do next. Saved me thousands in penalties for a late 1120-S filing where I also thought I had until October but actually needed to file by September.

Just wanted to follow up about the taxr.ai recommendation. I was the skeptical one but decided to try it with my partnership's late filing penalty notice. It immediately identified that I qualified for reasonable cause abatement due to some extenuating circumstances I mentioned during the analysis. I called the IRS using the specific reasonable cause arguments the system recommended, and they approved a full abatement of $3,800 in penalties! The transcript analysis showed my correct filing dates which helped prove part of my case. Definitely worth trying if you're facing these penalties.

If you're trying to contact the IRS about this, good luck getting through. I spent 4 hours on hold last week trying to resolve a similar penalty issue. Eventually found a service called Claimyr that got me connected to an IRS agent in about 20 minutes instead of the usual hold time. https://claimyr.com basically holds your place in line with the IRS and calls you when an agent is about to answer. They have a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. Was skeptical but it actually worked and I got my penalties removed with first-time abatement during that call.

Coming back to eat my words about Claimyr. After spending three separate days trying to reach the IRS about my 1065 penalties (got disconnected twice after 2+ hour holds), I finally tried the service. Got connected to an IRS agent in 35 minutes without having to actively wait on the phone. Explained my situation about missing the September deadline (thought it was October), and the agent granted first-time abatement immediately. $4,680 in penalties gone in a 10-minute conversation. Would have taken me weeks to resolve otherwise. Sometimes skepticism costs more than it saves.

One thing nobody mentioned yet - check if you actually did receive prior notices. The IRS is required to send multiple notices before sending debt to collections. Pull your IRS account transcripts (can be done online) and it will show all notices sent to you. If they sent notices to an old address or there's no record of prior notices, that strengthens your case for abatement. Also, 1065 penalties are especially harsh because they're designed to enforce timely filing for information returns. The $195/month/partner can add up quickly, which explains your $4950 penalty for what seems like a simple mistake.

I hate to be the pessimist, but be prepared for this to take multiple attempts. I had almost identical partnership penalties last year and the first abatement request was denied despite having a clean record. Had to call back, escalate to a supervisor, and be very persistent. Eventually got it abated, but it wasn't the easy one-call fix some people are suggesting. The IRS is incredibly backlogged right now.