Late Filing Penalty or Not

[Kram BergGold]

I have just prepared my client's 2015 tax return. She has a $750 Advanced Premium Tax Credit to repay. If she did not have this she would have a $600 refund. Is there a rule that repayment's of Advanced Premium Tax Credits are not subject to late filing penalties?
If not, do you think that filing the return without the Credit payback and letting the IRS send her a letter asking for Form 8962 will casue the IRS to miss the late filing penalty? Before you go "why are you making a big deal about a penalty on $150 of balance due". the reason is she owes $1400 for 2016 and if there is no penalty on 2015 I can get her a FTA for 2016. BTW, her 2016 balance due is from the repayment of the Advanced Premium Tax Credit ($1,000) and a penalty for not having health insurance for 6 months ($400).

[TaxGuyBill]

I don't think so. Sorry.

Notice 2015-09 provided temporary relief for 2014 to avoid the late-payment penalty and under-estimated tax penalty, *IF* it was on a timely filed tax return and met other requirements. So that means it is usually subject to the §6651 failure to pay penalty. So if it is subject to the failure to pay penalty, it would presumably be subject the the failure to file penalty (which is also in §6651), and I haven't seen anything that says otherwise.

https://www.irs.gov/pub/irs-drop/n-15-09.pdf

As for your question about "filing the return without the Credit payback", would you and your client really want to intentionally sign a false tax return? Besides, the penalty would still be owed.

[Rapid Robert]

do you think that filing the return without the Credit payback and letting the IRS send her a letter asking for Form 8962 will casue the IRS to miss the late filing penalty?

I think it would be a violation of §7206.

[Toobusy]

Late Filing Penalty

I have just prepared my client's 2015 tax return. She has a $750 Advanced Premium Tax Credit to repay. If she did not have this she would have a $600 refund. Is there a rule that repayment's of Advanced Premium Tax Credits are not subject to late filing penalties?
If not, do you think that filing the return without the Credit payback and letting the IRS send her a letter asking for Form 8962 will casue the IRS to miss the late filing penalty? Before you go "why are you making a big deal about a penalty on $150 of balance due". the reason is she owes $1400 for 2016 and if there is no penalty on 2015 I can get her a FTA for 2016. BTW, her 2016 balance due is from the repayment of the Advanced Premium Tax Credit ($1,000) and a penalty for not having health insurance for 6 months ($400).

I think there is a rule that Advanced Premium is not subject to late filing penalty. I read that IRS had the authority to receive the return with PTC on it, but it goes to another state department that is located within IRS that handle PTC. I had a client whose only refund was due to the PTC, and it took her a while to get her payment. I called and questions IRS about her refund, and was informed by IRS, that since my client refund was not a tax refund, it when to another department that was handled by the state; I was further advised that although the letters come from IRS, they are not from the Tax Refund Dept.

You need to file the 2015 Return first. If you file it without the repayment, IRS is going to ask for Form 8962 before releasing the refund. But you can take a chance and file without...and let IRS figure it out. I don't think there will be a late filing penalty. Also, if she is penalized ask for a "first-time Penalty Abatement" - research it on IRS. I believe it is PUB 1635, or you or she can call them and request it. I had my client call them, and they granted hers on the phone and sent her a letter afterward.

Much Success