Client was 38 days late in paying his 2021 taxex of $862.00. IRS wants $367.00 in late payment fee. Evan at 25% (215) it seems high. Any help ?
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Are you sure that is entirely a failure to pay penalty and nothing else?
First time abatement should work for FTF and/or FTP penalties if taxpayer has no prior lateness in most recent 3 years."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe Howard -
Have you seen the IRS notice or bill. It should spell it out. I think there is interest on top of the penalty.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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I have the notice. that says: 04-15-2022 --05-23-2022 Days 38 Interest rate 4.0% Interest Factor .004172838 Amount Due 367.50 Interest charge 1.53 Total 369.03 under the interest section.
Client did not pay until 05-23-2022. Gogle says penalty is 5% per month up to 25% on unpaid amount. unpaid amount was $862.00.
It also says the We found an error on your 2021 firn 1040 wihich affects the following area of your return ADDITIONAL TAX. Taxable income was 63048 so tax is 9614.00 so it is not an incorrect tax.
what am I missing?Comment
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Underpayment of estimated tax? That is considered an "addition to tax"."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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If they found an error and charged additional tax, then the balance due of $367.50 isn't from a late payment fee."Taxation is the price we pay for failing to build a civilized society." ~ Mark SkousenComment
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Have you run a form 2210 in your tax software. Generally when one of my client pays late my software will calculate the underpayment penalty and interest for the dates. If the client is paying online on the date calculated it is 99% correct. If they are mailing a check then there will be an additional amount for the transit time.
If there was an adjustment in the 1040 for any line numbers, expect another notice showing the correction. Alternatively pull a full transcript. I would suggest that.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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The underpayment of estimated tax penalty (Form 2210) does not extend beyond the original filing date (4/18) so it would not be affected by FTP of the balance due, but it might not have been included in the original return as filed so the IRS added it. Or, some other "addition to tax" as Beersheba mentioned."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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