The IRS has concluded that it has the power to abate interest and penalties where they have been paid and an amended return seeking a refund of tax was filed late. The facts indicated that a taxpayer had previously paid interest and penalties based on the tax liability shown on the taxpayer's original return. However, the tax liability was discovered to have been substantially overstated and the amended return got the tax liability correct. Unfortunately, the amended return was filed late - the statute of limitations for claiming a refund had already expired. The question was whether IRS could, under I.R.C. Sec. 6404(a)(1), abate and refund any of the penalties where the underlying tax refund claim was not timely filed. The IRS concluded that it could abate excess penalties and interest because I.R.C. Sec. 6404(a)(1) was permissive in nature which allowed IRS to abate the paid portion of any assessment. Accordingly, the amended return is to be treated as a claim for refund of penalties and interest paid in the prior two years before the filing of the amended return, to the extent the amounts exceed the taxpayer's actual tax liability. C.C.A. 201520010 (Apr. 23, 2015).