Note:

If an -O freeze is not reflected on the taxpayer’s account, whose address of record is in the covered disaster area, then input a TC 971 with an AC 688 via IDRS to ensure that the account will not have any penalties or interest assessed. Verify the area and impact year using Tax Relief in Disaster Situations before inputting a TC 971 AC 688.

Penalty Adjustments: If the -O Freeze is not on the module, notices with ZIP codes in the impacted disaster areas may require penalty adjustments for the period designated in the Disaster Relief Memorandum. Use Local Control File to select those notices with ZIP codes in the impacted disaster areas. Notice Review will review notices generated for taxpayers who have filed late tax returns, or submitted late payments during the disaster period. Notice Review will only address the Failure to File and Failure to Pay penalties if the following apply:

If only the Failure to File penalty (TC 166) is assessed, the original or extended due date is within the disaster period, and the return received date is timely based on the disaster postponed due date, abate the TC 166 for each month, or part of a month the penalty was assessed. See Federal Disaster Area IRC 7508A, IRM 20.1.2.2.2.2, Federal Disaster Area - IRC 7508A.

If only the Failure to Pay penalty (TC 276) was assessed and the original due date is within the disaster period, abate the penalty for each month or part of the month from the original due date to the postponed due date that the tax remained unpaid.

If both TC 166 and TC 276 penalties were assessed and the original or extended due date is within the disaster period, abate the part of the FTF penalty from the original or extended due date (if the original due date is within the disaster period). (See IRM 20.1.2.2.2.2, Federal Disaster Area - IRC 7508A, IRM 20.1.1, Introduction to Penalty Relief and IRM 20.1.2, Failure to File/Failure To Pay Penalties, for information and abatement procedures.)

If the taxpayer notates on the front of the return the designated disaster phrase, abate the TC 166 and TC 276 per instructions in (2) above.

If the taxpayer correspondence attached to the return is requesting relief of any penalty because of disaster damage or disruption, take the following actions:

Decide if the taxpayer qualifies for TC 166 and/or TC 276 relief based on the disaster criteria. If the taxpayer qualifies, abate the penalty(s).

If the taxpayer does not qualify for relief based on the disaster criteria but may qualify based on the Reasonable Cause criteria, route the case to Accounts Management using Form 5101 , Examination Referral Slip. This includes taxpayer requests for FTD Penalty abatement.

FTD and Reasonable Cause: All requests for abatement for FTD penalties received in Notice Review must be routed to Accounts Management for determination and resolution.

Estimated Tax Penalty: If an Estimated Tax Penalty (TC 176) has been assessed, decide if the taxpayer was required to make an estimated tax payment during the disaster period. If the payment was received by the date required by the Disaster Relief Memorandum, abate the part of the estimated tax penalty assessed for the underpayment. Notate on the adjustment document, "Adjustment Due to Disaster" . If in doubt, send case to Accounts Management for determination and resolution.