Late filing

[drdino]

W2 client did not file 2007 1040 yet. He did not get around to it. He came to me as a financial planning client but I uncovered this little tidbit. Questions....Return can still be efiled even though no extension filed correct? Does the return get prepared normally and sent in and then the penalty is assesed by the IRS, or do I have to figure the penalty myself. Thank you all.

[DaveO]

You can just prepare and file

as usual and the service will figure the prnalty and bill your client. If he had some stock sales or other variables you might want to figure the 2210 if he has a large balance due.

[drdino]

thanks

Thank you. Thats what I thought. Can the return be efiled until 10/15 only or longer?

[JohnH]

I always let IRS handle the Penalties & Interest. They will send a notice about 3-6 weeks after the return is filed. FTF penalty is easy to calculate, but the FTP penalty, estimated tax penalty, interest, etc can vary based on when the return is actually received. I think it's best to let IRS tell the client what they owe and then I spend the time checking THEIR math - it's much more productive.

[thomtax]

Thank you. Thats what I thought. Can the return be efiled until 10/15 only or longer?

10/15 is ordinarily the last day to file electronically unless there is a holiday or something that has caused it to be a day or two longer.

I may have a different viewpoint from others, but I let the IRS figure it and send bill. If they fail to do so, then it is their problem. If they do bill, the client is just where he started.

LT

[BOB W]

With regards to P&I, it has been mention on this board that computing P&I creates a lockin of those fees if later a refund is requested (1040X) . Preparer computed P&I holds a different status than IRS computed P&I. IRS computed P&I is adjustable.

Did I read that string right?

[taxmandan]

But is it a complete return without P&I?

I always let IRS handle the Penalties & Interest. They will send a notice about 3-6 weeks after the return is filed. FTF penalty is easy to calculate, but the FTP penalty, estimated tax penalty, interest, etc can vary based on when the return is actually received. I think it's best to let IRS tell the client what they owe and then I spend the time checking THEIR math - it's much more productive.

Food for thought: Here in Orygun preparer licensing is the strictist in the nation and Treasury recently took a look at it for consideration of national licensing requirements. So what does this have to do with the topic of discussion? Our licensing agency has made it clear that if a preparer does not do the P&I calculations, the return is incomplete and the preparer will be subject to penalties for failure to include them in the filed return. A little off point, but something to keep in mind when we all root for national licensure of preparers as being a good thing.

[JohnH]

My goodness!
Don't put that info in a public place.
Next thing you know the revnoo'ers in NC will be getting ideas....

[Gene V]

Food for thought: Here in Orygun preparer licensing is the strictist in the nation and Treasury recently took a look at it for consideration of national licensing requirements. So what does this have to do with the topic of discussion? Our licensing agency has made it clear that if a preparer does not do the P&I calculations, the return is incomplete and the preparer will be subject to penalties for failure to include them in the filed return. A little off point, but something to keep in mind when we all root for national licensure of preparers as being a good thing.

I generally file form 2210, however, before I file the form, I go over it with the client and
see if they want to pay the penalty now or not file the form and pay the penalty later.

Per IRS instrustion--form usually need not be file

From instruction:
Who Must File Form 2210

Because Form 2210 is complicated, we
strongly encourage you to let the IRS
figure the penalty. If you owe it, we will
send you a bill. If you file your return by
April 15, 2008, we will not charge you
interest on the penalty if you pay by the
date specified on the bill.
If you want us to figure the penalty for
you, complete your return as usual. Leave
the penalty line on your return blank; do
not file Form 2210.

[Black Bart]

Me too.

I always let IRS handle the Penalties & Interest. They will send a notice about 3-6 weeks after the return is filed...the FTP penalty, estimated tax penalty, interest, etc can vary...

2210s are non-starters for me. Nobody wants to pay for the extra time and if IRS figures don't match, then you lose face with the taxpayer.

I tell them to either pay the tax now and IRS will bill the penalty in three weeks or send the return without money and they'll bill you for the whole thing. Haven't yet had anybody insist on immediate payment. Anyway this works best for me and I'm only carrying customer service to a certain extent -- after that, they can like it or lump it.

[JohnH]

Better yet, tell them to pay YOU now and let the IRS bill them, if there happens to be any decision to be made along the lines of allocating money...

BTW, when they can't pay it all I suggest that they at least send a token payment with the return, rather than nothing at all. This is because I'm still one of those all-paper neanderthals and I like the idea of their having a canceled check as additional proof that they filed (along with Certified Mail & Return Receipt if the numbers are very big).

The rebate adds an additional twist to the whole thing, because the P&I is going to be deducted from their rebate check. There's always the possibility that they will pay the P&I bill, but it won't find its way through the system before the rebate check is issued, so it will be deducted from the rebate check. Eventually they will get the money back, but why go to the trouble? Someone who filed about 3 weeks ago & owed a couple of thousand brought their $128 invoice for P&I by my office today. I told them to not pay it - just wait for the IRS to deduct it from their rebate check.

[Black Bart]

Old timer, eh?

...I'm still one of those all-paper neanderthals...

Don't worry about it -- I'll bet you've got lots of company around here. Did you see Snag's (I think it was his) post on tax preparers' average age? Occasionally clients mention a friend who's "slipping." If I ask "Alzheimer's"?, some reply "That's right, he has Old Timer's."

The rebate adds an additional twist to the whole thing, because the P&I is going to be deducted from their rebate check. There's always the possibility that they will pay the P&I bill, but it won't find its way throught he system before the rebate check is issued, so it will be deducted from the rebate check. Evantually they will get the money back, but why go to the trouble? Someone who filed about 3 weeks ago & owed a couple of thousand brought their $128 invoice for P&I by my office today. I told them to not pay it - just wait for the IRS to deduct it from their rebate check.

Again, same here.

...I like the idea of their having a cancelled check as additional proof that they filed (along with Certified Mail & Return Receipt if the numbers are very big).

Years ago I read a lawyers' newsletter that said the only way to really prove that you mailed a certain document was to have a notary stamp a statement of exactly what he saw you put in the envelope -- otherwise your receipt only verifies you mailed something to IRS, but not what (I never heard of anyone actually doing this).

[Bill Tubbs]

Income lumped later in year

as usual and the service will figure the prnalty and bill your client. If he had some stock sales or other variables you might want to figure the 2210 if he has a large balance due.

Filing Form 2210 can save the client money if the income came in more towards the end of the year, such as a large cap gain from a stock sale in the 4th quarter, a bonus late in the year, or the like. I have had a couple situations like this where it has been to the client's benefit (after my fee) to calculate this.

Bill