Letter 3477 (also issued as Letter 3477C) is the IRS Interest Suspension letter. The IRS uses it to communicate its decision on any matter under Internal Revenue Code section 6404(g). It is not an installment agreement letter.
What Interest Suspension Is
Section 6404(g) protects individuals who filed their income tax return on time, including extensions. If the IRS does not send a notice specifically stating the additional liability and the basis for it within 36 months after the later of the date the return was filed or its original due date, the IRS must suspend certain interest and time-based penalties for the period after those 36 months until 21 days after it finally sends that notice.
Suspension does not apply in every case. Exceptions include the failure to file and failure to pay penalties under section 6651, fraud, tax shown on the return itself, gross misstatements, certain reportable and listed transactions, and criminal penalties.
What This Letter Means
The letter tells you whether the IRS agreed that interest suspension applies, and to what extent. If it was denied, the letter should explain why.
What to Do
- Check the return filing date, the due date, and the date the IRS first notified you of the additional tax.
- Compare the interest on your account transcript to the decision.
- If the IRS used a wrong date or overlooked a fact, write back with documentation.
Know the Limits
Interest suspension is different from interest abatement. A 6404(g) suspension decision does not carry the Tax Court review or Appeals rights that apply to some interest abatement denials. Other relief may still be available, so get advice before you give up on the interest.
If you received Letter 3477 and the interest on your account looks wrong, call us at (813) 229-7100.