Client and child had no insurance Jan, or Oct, Nov, Dec. (just inbetween) They are liable for penalty. With the new executive order and the news letter that TTB put out, do I figure the penalty or leave it off? What's everybody else doing. I already have figured quite a few penalties. I don't want to have to amend, but I want to do right.
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I think Form 4868 is the only choice you should recommend.
If the client chooses something different, they will have to live with the consequenses (whatever they may be)"The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
Even though several people are talking extensions, I don't see the point. Seems if they were going to change law for personal responsibility payment they would have done it "day one" of new administration. Since they didn't any change would likely be contained in the "replace" portion which won't come until later. Even if they do away this it, highly unlikely it would be retroactive to 2016 and even more unlikely that it would be treated differently for people you have already filed and those that haven't filed yet.Comment
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ok, appreciate the input. I believe I will continue as I started.Comment
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I don't disagree with the response, but neither do I agree with it. It is just as likely that this will turn into a "Don't Ask/Don't Tell" situation. That is, if the taxpayer files and pays the penalty, they can't get the money back. But if they file a silent return, they may never hear a word about it. Or there could be retroactive legislation to clarify the issue, maybe even do away with the penalty altogether. Then of course that generates a blizzard of amended returns.
An extension simply buys some time to see how this all plays out - it may make a difference and then again it may not. I don't have very many clients who are subject to the penalty, but I sure wouldn't want to be in a situation where a client asked my why he had to pay hundreds of dollars for the penalty while his brother-in-law who also didn't have coverage didn't have to pay it. To me, that looks like an excellent way to lose a client to the brother-in-law's tax preparer. It could also be an excellent way to do the opposite if the shoe is on the other foot (gain the brother-in-law as a new client next year)."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Maybe I'm missing something, but I don't see what the hoopla is about. My understanding is there has been no legislative change and the announcement that the IRS will process "silent" returns is nothing different than what they did the last couple of years. My opinion is it would be unethical for us to prepare a return without answering the question. It's in the same general vein as knowing a client has sideline Sch C income and choosing to remain "silent" and not include the income.Comment
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I think you have it right, as things stand today. But we have 7 months ahead of us in which things could change significantly. Not saying they will, not saying they won't. But my advice to a client who owes the penalty is to extend. By waiting to see if anything develops, they may save several hundred dollars. But then again they may not. It is THEIR decision on what to do. If they choose to go ahead and file, I won't prepare a silent return (at least not until more direction comes down from IRS on this issue).
The point is that this is very much a moving target. What's the hurry?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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