Anyone have advice on succesful "reasonable cause" claims to avoid penalties?

[LCP]

..... particularly with regard to payroll tax and 1099 prep issues?

TIA

[Corduroy Frog]

Dealing with Payroll Tax Penalties

I'm not the world's foremost expert on the subject, but IRS will in general be lenient for good cause, if you describe the good cause and don't do it too often. The most salient factor is whether the taxpayer has been given relief in the past. As the amount of the penalty increases, however, they are less likely to grant relief.

Keep in mind that their perspective on penalties is different than ours. We tend to think of a penalty as a payment resulting from doing something "wrong" -- like a kid being caught with his hand in the cookie jar. The IRS perspective is a penalty is just another source of revenue, like another tax, and not so much as punishment for some heinous evil deed.

States vary, particularly with SUTA. SUTA funds are horrendously low in every state, and if you are in Michigan you are in one of the worst. In most states, the state authority will reject an unemployment claim just to save money if the employer protests the claim, even for the flimsiest reason. No longer has to do with whether the protest is right or wrong, nowadays it is just "if there is any protest whatsoever", deny the claim and save the money.

[ATSMAN]

I tried to get the penalties waived on a case where the taxpayer was not advised correctly by his former accountant on timely deposit of payroll taxes and timely filing of form 941.

No luck. IRS would not budge. Auditor said taxpayer can go after accountant who gave erroneous advice.

IRS is not going to give you a break if it involves trust funds.

[JON]

First time

If you are normally good, but missed one time deadline - they have always been willing waive. Penalties are meant to punish continuous abusers..

If they have been out of line for a long time I know of no exceptions. If you did not and have not filed ANY 1099s and are required to good luck. If you attemp to file and do so timely you can always add 1099s later to the original filing and I have never seen penalties applied. The federal and states need money and love penalties. That is how they justify their employment.

[taxea]

read their rule on penalties. You might be able to show that TP had no intent as cited in the rules. Use the IRS wording.

[John of PA]

I have had success enclosing a check to pay the penalty along with your request for relief as an act of good faith. Most of the time, IRS granted relief and issued a refund.

[taxea]

Good to know John, what did you use as a reason?

[John of PA]

They had health issues that prevented them from keeping up with day to day responsiblilties for about a year.

[taxea]

Thanks John....anyone else please include the reason that was acceptable to the IRS