Est Payments from 1040X?

[Snaggletooth]

New this year --

Is a provision at the bottom of 1040-X to credit a refund to a future years' taxes. Amending 2009 with a refund? The
refund can be applied to 2012 tax liability. Historically, taxpayers have not been able to do this, and had to wait on the
IRS to process the 1040-X to get their money.

Soooooo....

Today a client gets a check for his 1040-X for 2011 for $3500 plus $200 interest. (Not real numbers - illustrative only).

This isn't what we wanted. We wanted the $3500 to apply to his 2013 estimated taxes. Worse still, we reduced his
April 15th estimated payment by the $3500 from what otherwise would have been calculated. We properly indicated the
designation at the bottom of the Amended return.

Anyone else but me have this experience?

[Jiggers]

Yes. I did a 1040X for 2011 for a client, with the overpayment to be applied to the 2012. IRS sent the check. They totally disregarded the request to apply to 2012.

[jimmcg]

Happens quite frequently.

New this year --

Is a provision at the bottom of 1040-X to credit a refund to a future years' taxes. Amending 2009 with a refund? The
refund can be applied to 2012 tax liability. Historically, taxpayers have not been able to do this, and had to wait on the
IRS to process the 1040-X to get their money.

Soooooo....

Today a client gets a check for his 1040-X for 2011 for $3500 plus $200 interest. (Not real numbers - illustrative only).

This isn't what we wanted. We wanted the $3500 to apply to his 2013 estimated taxes. Worse still, we reduced his
April 15th estimated payment by the $3500 from what otherwise would have been calculated. We properly indicated the
designation at the bottom of the Amended return.

Anyone else but me have this experience?

[ChEAr$]

Looks like a good time to get out the old yellow broad brush marker and highlight that last line.

I use it many times to mark an item on a page with references same item on another form or schedule.

[taxea]

New this year --

Is a provision at the bottom of 1040-X to credit a refund to a future years' taxes. Amending 2009 with a refund? The
refund can be applied to 2012 tax liability. Historically, taxpayers have not been able to do this, and had to wait on the
IRS to process the 1040-X to get their money.

Soooooo....

Today a client gets a check for his 1040-X for 2011 for $3500 plus $200 interest. (Not real numbers - illustrative only).

This isn't what we wanted. We wanted the $3500 to apply to his 2013 estimated taxes. Worse still, we reduced his
April 15th estimated payment by the $3500 from what otherwise would have been calculated. We properly indicated the
designation at the bottom of the Amended return.

Anyone else but me have this experience?

To my knowledge the refund gets applied to the following year. I would attach a statement detailing which tax year TP wants it to apply to....however if there are liabilities due the IRS may not honor the request.

[JohnH]

If the client sends the $3,500 back as an estimated tax payment right now, the Estimated Tax Penalty at end of year will only be about $60 max.

[Snaggletooth]

Why Should There Be A Penalty?

John, the IRS screwed it up. Why should there be ANY penalty?

[JohnH]

Ron: i agree the IRS screwed up, but there is a point of diminishing returns. I was just thinking about what one might do to solve the problem. I'd have the client send the estimated tax payment and i'd write IRS a letter. But beyond that, and knowing IRS probably won't respond favorably, I'm not sure it would be worth the cost of doing anything else.

[taxea]

The truth of the matter is that the IRS can, and frequently does, waive the penalty because it should not be charged if the TP had no intent to defraud and acted in good faith. Read the cite and base your letter requesting waiver and refund of the penalty and subsequent interest based on the wording in the law.