I received a letter from the IRS stating that I underreported my taxes for the year 2021. The reason for this under reporting was a retirement account that I cashed out, and I was told that all the taxes would’ve been taken out on it. Doing further researching, there should’ve been a document sent to me which was not sent to me due to me moving to a different state, and somehow getting lost in the mail. I have gone ahead and paid the amount that they proposed which was $6795 ($5335 tax owed, $1067 substantial, tax, understatement, penalty, $393 interest). My question is is there a way to file an appeal to get the substantial tax understatement, penalty, and interest taken off this bill since I was only $335 over the $5000 mark? Any help would be great and as always I appreciate your time.
