Company I retired from merged and forced lump sum of nonqualified pension of $300K. I may have an under with holding penalty. Can I appeal that?

[bwa]

Did you begin paying in estimated tax payments when the distribution was made?  If so, you can avoid any underpayment penalty by the technique of "annualizing" your income.  If you just ignored the requirement to make them even after receiving the distribution, I can't see the IRS abating the penalty.

[dmertz]

If annualizing is necessary to reduce an underpayment penalty, the entire lump-sum payment will be treated as income in the quarter that it is received and, generally, the entire estimated payment for the tax liability attributable the lump-sum distribution would also need to be paid by the due date for the tax quarter in which the distribution was received, otherwise there can be an underpayment penalty.

[Hal_Al]

Although your circumstance may be an exception to the 10% early (before age 59-1/2) penalty, they are not an exception to the underpayment penalty. "Annualizing" may help reduce the penalty. You should prepare form 2210 and reply to the IRS with that form