I received disability from a federal government job a couple of years ago and left the country to seek medical treatment. In that time I did not file federal income taxes for 2008 and 2009. In 2008, I was owed a refund of about $6,000 and in 2009 I owed about $5,800 (including penalties and interest) in income taxes.
Now in 2010, I finally filed my income tax returns for the previous two years and I received my 2008 refund of $6,000 . I also payed my 2009 taxes in full but was also hit with heavy penalties and interest charges.
I than filed for abatement of my 2009 penalties and interest. I spoke to a rep over the phone and she instantly abated all penalties and interest fees. I used disability as my reason while talking to the rep over the phone. I was than sent a letter confirming the amount that was abated and it matched what I was told over the phone.
A couple of weeks later, I was sent a letter stating changes to my 2009 form 1040. The letter said " We changed your 2009 form 1040 to correct your: Penalty due to reasonable cause (interest is charged on any unpaid tax and my not be removed for reasonable cause)".
Basically they added the interest charges back on and abated the penalty charges.
So my question is, because I did not file my 2008 taxes and did not claim my tax refund of $6,000 until 2010, is there anyway I can get the interest charges from 2009 abated considering the amount owed to me in 2008 was greater than what I owed in 2009?
I know this is not the fault of the IRS because It was my fault for not filing and claiming my refund in 2008. I'm just wondering if I have any options because I was told that the IRS is not allowed to abate interest for reasonable cause because of a law passed by congress.
Your help on this will truly be appreciated. Thank you.