Any chance for abatement?

[gowithmygut]

While all is good now there was a time. . .
In May of 2004 I paid 85K for personal income tax for years ' 92,' 93, ' 95, ' 96-' 98. I suspect that 50% was penalties and interest. Do I have any reasonable chance of getting some that amount back? If I do I would first like to obtain from the IRS the breakdown of principle, penalties and interest, how do I go about requesting that?

[Black Bart]

go with our guts

While all is good now there was a time. . .
In May of 2004 I paid 85K for personal income tax for years ' 92,' 93, ' 95, ' 96-' 98. I suspect that 50% was penalties and interest. Do I have any reasonable chance of getting some that amount back? If I do I would first like to obtain from the IRS the breakdown of principle, penalties and interest, how do I go about requesting that?

I know what you mean; I have the same problem (gut-wise). If it gets any bigger I'm afraid it won't be able to go with me and I'll just have to leave it home.

Oh...yeah...tax problem....sorry; for some reason or another I frequently lose my "tax focus" when posting here. Well, let's see; if you're a civilian (non-practitioner) then you might simply call IRS (1-800-829-1040) and ask the same questions you asked here (you may have to listen to MUZAK for about 15 minutes). Since they won't know the answer, they'll probably transfer you to a "tax law specialist" up with whom (catch that, Armando?) you will be chatted. After half an hour or so of back-and-forth and teeth-gnashing anxiety, you may have either your problem solved or a promise that it's in the works and will be.

Practitioners here might say you should consult a local tax professional (always a good choice from my point of view). However, if you don't like your local guy because he does bum tax work or you don't like the dirty, rotten, low-down, inexcrupulous chain firms (who shall remain unnamed here), then, assuming you don't mind spending some dough, you might contact IRSProblem.org (1-888-829=5293 / www.irsproblem.org) who specialize in that sort of thing. Whatever you do, don't call J. K. Harris. They'll wring you out like a wet dishrag.

Interesting case. 85K for the nineties, eh? There may, indeed, have been a (yuk-yuk) "breakdown of principle" (sorry-it's an inside joke for that endangered species-the scarlet spellingbuff nitpicker).

Drop in again. Door's always open for anybody with guts. Say, you wouldn't happen to have 140 bucks on you, would you?

[Armando Beaujolais]

they'll probably transfer you to a "tax law specialist" up with whom (catch that, Armando?) you will be chatted.

Yes, yes, very good. Just don't let that type of verbalization creep into conversations with your clients.

[ED SMITH]

In May of 2004 I paid 85K for personal income tax for years ' 92,' 93, ' 95, ' 96-' 98. I suspect that 50% was penalties and interest. Do I have any reasonable chance of getting some that amount back? If I do I would first like to obtain from the IRS the breakdown of principle, penalties and interest, how do I go about requesting that?

I would guess that more than 50% was penalties and interest, especially if some of it was from late filing. To get a breakdown, request fom the IRS, a copy of your "Individual Master File Transcript" (IMFTRA), for all years since '92. It's a good idea to get all years up to the present, to be sure you have a zero balance. You may have to wait a month or two. Also, it is dificult to read, after all it's from the IRS.

As far as any abatement, the chances are slim to none at this point. You were delinquent, that means you were a bad boy, for 6 out of 7 years, not a show of good compliance.

ED

[gowithmygut]

I

As far as any abatement, the chances are slim to none at this point. You were delinquent, that means you were a bad boy, for 6 out of 7 years, not a show of good compliance.

ED

Will it carry any weight that years 1999-2004 were timely filed and paid in full?

[gowithmygut]

I know what you mean; I have the same problem (gut-wise). If it gets any bigger I'm afraid it won't be able to go with me and I'll just have to leave it home.

Oh...yeah...tax problem....sorry; for some reason or another I frequently lose my "tax focus" when posting here. Well, let's see; if you're a civilian (non-practitioner) then you might simply call IRS (1-800-829-1040) and ask the same questions you asked here (you may have to listen to MUZAK for about 15 minutes). Since they won't know the answer, they'll probably transfer you to a "tax law specialist" up with whom (catch that, Armando?) you will be chatted. After half an hour or so of back-and-forth and teeth-gnashing anxiety, you may have either your problem solved or a promise that it's in the works and will be.

Practitioners here might say you should consult a local tax professional (always a good choice from my point of view). However, if you don't like your local guy because he does bum tax work or you don't like the dirty, rotten, low-down, inexcrupulous chain firms (who shall remain unnamed here), then, assuming you don't mind spending some dough, you might contact IRSProblem.org (1-888-829=5293 / www.irsproblem.org) who specialize in that sort of thing. Whatever you do, don't call J. K. Harris. They'll wring you out like a wet dishrag.

Interesting case. 85K for the nineties, eh? There may, indeed, have been a (yuk-yuk) "breakdown of principle" (sorry-it's an inside joke for that endangered species-the scarlet spellingbuff nitpicker).

Drop in again. Door's always open for anybody with guts. Say, you wouldn't happen to have 140 bucks on you, would you?

Now that I have returned from the principal's office and understand the principle of the principal issue I'm principally searching for a principled position to get some of my non-principal payment back.

[Bird Legs]

Penalty Abatement

If the returns were timely filed and paid, why would there be penalty & interest?
Maybe someone had too many of those 31 gallon vats of beer and forgot to pay the
tax on it.
Forgot about the years prior to 1999.
Question: Can penalties be refunded on returns that are over the 3 year limitation?

[gowithmygut]

To clarify

92-98 were either late, not paid in full or both, 99-04 were timely and paid in full

[Black Bart]

Principal's office

Now that I have returned from the principal's office and understand the principle of the principal issue I'm principally searching for a principled position to get some of my non-principal payment back.

Aw, take it easy. It's not like I said your wife's ugly or anything. What is it about spelling advice-albeit unwanted-that ticks people off so much? I believe you could tell someone that they stink and not get as much reaction. Besides, I softened the blow with humorous, non-personal references. You can see, can't you, how the catchy phrase "breakdown of principle" was just too juicy to pass up? Well, anyway, please accept my apologies and, just so you know that it won't happen again, I herewith vow to let the English language go to pot. It will just have to evolve its way through history from now on without my help.

Now, I'll try to make it up to you. Here's another couple of (free) shots to take if you don't want go with the costly lawyers at IRSProblem. Call IRS at 1-800-829-0582. Ask for extension 462. If that number's out of service, call 1-800-829-4262. Ask for extension 277. Tell them you talked to an IRS agent last week and they gave you this number. Tell them you've phoned several times before and written letters and have received no response at all (I know, I know, it's not true, but they don't know that and you have to have tried normal channels before they will help). They aren't the sharpest people in the world, but they're a few cuts above the average IRS bear, so see what happens with them.

If those don't work, try the "Taxpayer Advocate Service." Although they're "inside" IRS, they are independent of it and actually represent the taxpayer rather than IRS. I've had good luck with them and they are very good at cutting through red tape. Try 501-324-6370. That's a Little Rock, Arkansas number and they may not handle cases from other states, but they should be able to furnish you the number for your area.

If none of that stuff works, you may feel like throwing in the towel and going with the majority opinion that you haven't got a snowball's chance in Hades (musn't cuss). Still, I put a lot of stock in some words from Nixon's "farewell" speech; "Always do your best; never give up!" So, if all else fails, write a really long letter to your IRS service center and tell them how you're trying to do the right thing (faithfully filing those later years), how you're a regular church-goer, how you, as a patriotic American, firmly believe that this country's tax system is fair and just, that they are fining you an unconscionable amount which is more than a common criminal would be fined, that such penalties would be an extreme hardship for your family, that you plan to write your senator and congressman, and, finally, tell them that, if your request for abatement is denied, you would like the name of their superior as you fully intend to appeal this matter to the highest level (that usually helps because nobody wants the boss on their back about shoddy treatment of a God-fearing taxpayer).

Best of luck--- BB

P.S. You aren't "bad" (don't develop a phobia over it); I know people who have never filed and don't intend to. They'd think you're a principled piece of prince.

[Snaggletooth]

News You Can Use

Ok, Gut (be thankful you're going with yours instead of mine), now to try to address your original question. And you haven't been officially welcomed to this board until you've been harpooned by Black Bart, so stick around, and post often.

Not so sure this would be looked upon with IRS welcomed arms, but try to separate your INTEREST from your taxes and penalties from that period. IRS has insisted that interest be deducted in the year PAID, and has used that to their advantage countless times.

In your case, you paid the interest in 2004, so you potentially have a deduction. You have one more wicket to roll through: Does the interest attach to a business deduction or is it personal? Purists will answer all interest is personal, but I don't necessarily believe it. Personal interest is, of course, non-deductible. However, your liability may actually stem from a business such as a proprietorship. Or it may stem from such things as payroll taxes. This would be deductible on a schedule C.

Some on this board will say this is preposterous, but I have filed a schedule C with zero revenue, business interest deduction, and got a refund based on same. Return was later audited and the auditor accepted the interest deduction as a business expense.

Good luck with this - Ron Jordan, Manchester, TN

[gowithmygut]

Thanks for the suggestions

I'm game for telling my story, although I was trying to understand the rules so that I didn't paint a beautiful picture that left me in a corner I couldn't exist. The taxes were personal I was an employee during the period. The filing problem stemmed from two sources, one I had a bad habit of betting on the wrong horse, and two that didn't stop me from betting. I did help my ex get innocent spouse relief, don't know if that is going to add to the picture or put me in the corner. I have heard that I have two years from the payment of penalties and interest to make a case for refund, but I am also concerned with the SOL since the tax years were so long ago.

[ED SMITH]

Forgot about the years prior to 1999.
Question: Can penalties be refunded on returns that are over the 3 year limitation?

Yes. I think I posted it here. A client was denied exemption, EIC and CTC for three of his kids for 99, 00,01. An audit recon was filed with docs showing that he, wife and the kids lived in the same house at the same time. He got a complete refund plus interest.

ED

[gowithmygut]

The final chapter

Made my reasonable cause arguement and was just notified that penalities for 4 out of the 5 years have been abated. The year that was not granted was the most recent and the year with the smallest penalty. Only the reasons for denial were stated and don't really understand the rational for the abatement of four years and the denial of the fifth, but I'll take the four and decide later whether to appeal the fifth. Thanks to those that provided advice as well as those that motivated me by telling me I didn't stand a chance.

[Bees Knees]

Good to hear advice from this board actually paid off with monetary benefits. Personally, I would have thought you had zero chance of getting anything back. You never know, unless you try.

[Black Bart]

Nice goin', GG

Don't know how you did it -- I haven't hit four out of five since...hmm...ever, I think. But you got the money anyway and that's the principal thing. We'd like to use your method too, so how about letting us know what did the trick if you ever find out. The reason we're such a skeptical bunch here is that after continually bouncing off IRS brick walls you expect to get headaches.