Some time ago a post discussed requesting waiver of penalty for a late required minimum distribution from an IRA. I had a client with such late distribution (made in January 2007) for the year 2006. I filed in February the form 5329 part VIII (calculating a $800 penalty) as a separate tax filing with a simple statement of facts requesting waiver instead of making a payment. The first of May my client received IRS correspondence waving the penalty.
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Lesson learned
I'll have to try going the "separate filing" route next time this situation presents itself. I had a case a couple of years ago where I filed the 5329 with the return, asked for a waiver (with a simple, believable explanation) and did not have the client pay the penalty with the return.
The IRS demanded the penalty be paid FIRST before they would consider the waiver. We did that but it took them a few months to finally grant the waiver (and repay the penalty). -
I had the same experience Mike..
next time, OldJack's method is what I'll do.Comment
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Thanks, Old Jack. It never occurred to me that I could have done a separate filing. Took almost a year for my client, even though penalty was paid with return.Comment
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I think I was the one that posted on that. I haven't heard from my customer yet. I filed the form separate as well with a statement. I believe it was in March they mailed them. They might have got the letter waving the penalty and not contacted me. I hope to hear about it soon.Comment
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The 2004 instructions for Form 5329 said the penalty had to be paid first. That is why you got the letter. The 2005 instructions for Form 5329 were changed to say attach a letter of explanation requesting the penalty be waived, without any mention of paying the penalty first.
It does not matter whether Form 5329 is filed with the return, or by itself.Comment
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