Letter 854C is titled Penalty Waiver or Abatement Disallowed/Appeals Procedure Explained. The IRS sends it when it fully or partially denies a request to remove (abate) or waive a penalty. It is not an identity verification letter.

What This Letter Means

You, or someone on your behalf, asked the IRS to take a penalty off your account. That request may have been a reasonable cause statement, a first-time abatement request, or another penalty relief argument. The IRS reviewed it and said no to some or all of it. The penalty stays on the account.

The letter should state the specific reason the request was denied. It also explains your appeal rights and the steps you must follow if you want the IRS Independent Office of Appeals to review the decision.

Your Options

  • Send new information. If you have facts or documents the IRS did not see, send them. The IRS reviews a reply for new information that would allow the penalty to be removed before it goes any further.
  • Request an appeal. If you disagree and want Appeals to review the denial, follow the protest instructions in the letter. The appeal request must be in writing and signed by you or by a representative with a valid Form 2848 on file.
  • Accept the decision. If you agree, pay the penalty and any interest to stop further interest from building.

Deadlines

Use the response date and instructions printed on your letter. If you paid the penalty and may want to sue for a refund later, the refund suit deadlines are technical. Get advice on that before relying on any timeline.

Practical Tips

  • Keep a copy of the letter.
  • Address the exact reason the IRS gave for the denial. Repeating your first request word for word rarely changes the result.
  • Send your response by a trackable method and keep proof of mailing.

If the IRS denied your penalty relief request and you want to appeal, call us at (813) 229-7100.