Amended Return 1040X with Balance Due Failure to Pay Penalty

[Gregory]

Hello TaxBook Community,

Can the IRS impose an IRC section 6651(a)(2) and/or 6651(a)(3) failure to pay penalty on an amended return that was prepared in good faith and without any notice from the IRS. The Taxpayer paid the balance due with the amended return so payment was made in full with the amended return.

Thanks for your help with this!
Gregory

[New York Enrolled Agent]

Hello TaxBook Community,

Can the IRS impose an IRC section 6651(a)(2) and/or 6651(a)(3) failure to pay penalty on an amended return that was prepared in good faith and without any notice from the IRS. The Taxpayer paid the balance due with the amended return so payment was made in full with the amended return.

The penalties you ask about are for late payment. Ask yourself - did the taxpayers pay their tax after the due date of the return? If the answer is yes, then they paid their taxes late. You can request an abatement using the reasonable cause exception in those sections..

[Gregory]

Thank you for your Reply New York Enrolled Agent,

How do you therefore interpret the1040X instructions below:

Penalty for late payment of tax. If you don’t pay the additional tax due on Form 1040X within 21 calendar days from the date of notice and demand for payment (10 business days from that date if the amount of tax is $100,000 or more), the penalty is usually 1/2 of 1% of the unpaid amount for each month or part of a month the tax isn’t paid. The penalty can be as much as 25% of the unpaid amount and applies to any unpaid tax on the return. This penalty is in addition to interest charges on late payments. You won’t have to pay the penalty if you can show reasonable cause for not paying your tax on time.

The above seems to suggest that penalty is not due if you pay the additional tax and any interest with the 1040X within 21 calendar days.

Thank you to the community for their continued help.

Thanks.
Gregory

[Rapid Robert]

DId the IRS letter specifically cite those code sections? (IRC section 6651(a)(2) and/or 6651(a)(3) failure to pay penalty)

Is it possible an accuracy related penalty is involved? Also, there is going to be interest charge back to April 15 deadline no matter what.

If you can provide rough numbers, it might be more enlightening.