My client, a child, has only interest income from US governement sources which VT does not tax. So I chose not to file. For 2003 they billed my client. When I filed the 2003 return, Vt removed the tax and interest but charged a $50 penalty. If I file the 2004 and 2005 returns now, before they come after my client will they still charge the $50 penalty.
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Late Filing Fee
Probalbly a late filing Probably a late filing fee and interest.
Remember the states have a requirement to file a state return based on determinable value. Some state use the federal AGI, others use federal taxable income, or just gross income from the state, etc. They may allow for the exemption or standard deduction, but if the taxpayer meets the state's filing requirement a return must be filed even though there is no state tax due or a refund due the taxpayer. Many states are now charging a penalty and interest for late filing.
Moral: if a state filing requirement is meet, file the return or inform the client in writing that a filing is required.
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