pentilies

[superman]

Does anyone know if the IRS would let pentilies go for some under reported interest. Client just recieved a cp2000 on interest not reported for 05 and the pentilies are over $1000. She has always paid her taxes on time and now has this happen do they give and reprive to anyone or should she just pay it and be done with it? This was an honest mistake and an oversight on her part.


Thanks for any help or advice.

[erchess]

My two cents

Any time tax is paid late there is interest. You are never going to talk the IRS out of the interest. However, you may be able to talk them out of the penalties. They would have to be able to believe that a reasonable person of her income might forget she had x dollars in interest because the amount is small compared to the rest of her income. For example, the IRS is never going to believe that you accidentally left half your income off the return but they might believe that you accidentally left off two or three percent of your income.

I would write a letter to the IRS stating her excuse and asking for elimination of the penalty. Enclose payment for the interest.

[LTS]

more two cents

as erchess states, the degree of the mistake is a consideration.
$1000 in penalty (and/or interest?) implies a large understatement of income that is not easy to attribute to an 'honest mistake'. was this in a failure to file on time situation (not good), or a failure to pay on a timely filed return?

[jimmcg]

Try requesting an abatement for reasonable cause. State the facts and circumstances and state a case for abatement of penalties for your client. Worth a try and the only way you will find out.

[S T]

If taxpayers prior history is clean

I had a recent late payment penalty due to a discrepancy on the timely filing of an extension, and thanks to a post on another Board, pleading ""a statement of facts" IRS looked at the taxpayer's prior record and abated the late pay penalty.

It would be a little difficult to protray maybe that your taxpayer didn't receive the the proper interest/divided reporting statements, but then one could always make a case, due to change of broker, change of address, etc.

Worth a try!

Sandy

[bertrans]

Penalties

Please establish first the nature of the penalty. If a CP-2000 was involved, you';re probably looking at the substantial understatement of income penalty: not impossible to have abated,but not easy, either.

[Kram BergGold]

My experience

I have tried three tiems to get the substantial understatement of income penalty waived. One time I was able to amend the return to add an exemption thus getting the additional tax below $5,000, thus the penalty evaporated. The other two times the IRS just denied my request. So my feeling if you have the substantial understatement of income penalty you won't get it waived.

[bertrans]

Penalties

I did say it wasn't easy. Sorry./