Tax Penalty

[Duane Anderson]

I have a long time client who inherited his Father's house rental business six years ago, and have finally caught up the last 10 years of tax filings for the son. In the early years he had refunds coming but because of the late filing no refunds have been received. The last three years the taxpayer had total tax due of $125,000 - $150,000 each year but have been unable to get him to make quarterly estimated tax payments. So for 2018 IRS sent a penalty notice for $41,000+. I prepared a letter requesting abatement but that was denied. I called the IRS at the number they gave if you disagree with the amount of the bill, but finally got through and talked to an agent. They indicated they cannot make any adjustments to the penalty and my only course of action now is to go to tax court, which we do not want to do considering the time and money involved. All prior years taxes and penalties have been paid, except for the above and 2020 return yet to be filed.

Do I have any other options or is the above the best we can do? Thanks,,,Duane Anderson

[Rapid Robert]

You mention not making estimated payments, but then you also mention catching up on late filed returns. So what penalty(s) are you referring to: FTP, FTF, or underpayment of estimated tax?

Why do you think the taxpayer should not owe the penalties? If you could go to court without the hassle, what would be the argument?