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    Assessment of Interest

    Client mailed balance due tax return, enclosing large payment, on April 15, 2009. Aware of IRS reputation for pretending they don't receive things, client had the good sense to certify the mailing at the post office effective April 15th.

    Post Office did not deliver to Austin Service Center until May 23, 2009. IRS calculated a $2300 failure-to-file penalty, a $230 failure-to-pay penalty, plus interest of $112. Also a penalty for underpayment of estimated tax (which was legitimate, calculated on the return, and nothing to do with this question).

    You can imagine what had to happen to clear this mess up. Correspondence back and forth, copies of postal documents, etc. After several months of haggling, the IRS finally removed Failure-to-file and Failure-to-pay penalties. However, the lions share of the interest was not waived.

    They claim they are not permitted to waive interest because it is based on payment received, and not payment mailed. Anyone know about this?

    #2
    They will waive interest if the delay was caused by an IRS employee, but I don't know about whether they will because of post office mishaps.

    I think your client needs to pay the IRS the interest and make a claim with the Post Office. Good luck.

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      #3
      I think someone at IRS doesn't understand their own rules. I'd keep pestering them about the interest, because I don't think it's due. Once they agreed that the return was timely filed, they agreed that payment was timely as well, IMO. Otherwise, everyone who files with an Apr 15 postmark and includes a check should be getting a bill for interest.

      Last edited by JohnH; 05-26-2010, 11:43 AM.
      "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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        #4
        Interest

        That is why I have all my clients who owe and a filing the last minute e-file with direct debit.Had a client this year who owed over $20,000 filed on the 15th with direct debit money not removed from account till 20th no interest no fine.I e-file all returns that are able to be e-filed.I will not take clients that will not e-file.

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