Abatement of Initial Tax

(1) Any initial 25% tax imposed regarding the excess benefit transaction, including

interest, may be abated, not assessed, or refunded if the following three requirements are met:

a. Correction of the excess benefit within the correction period defined in

Section 4963(e), and

b. The excess benefit transaction must be due to "reasonable cause", and

c. The excess benefit transaction must not be due to "willful neglect." See

Section 4962(a)(1).

(2) If the 25% tax imposed on the disqualified person is abated, the 10% tax imposed

on the organization manager is also abated. The abatement of Section 4958 taxes is provided for in Section 4962(a).

Note: See IRM 4.70.17.8.4, Requests for Abatement under IRC 4962, (or its successor) for specific procedures when examining abatement requests.