I missed the 3/15 extension filing date on 2 partnerships and 1 S- Corp. I filed them in May and in June, they got penalty letters. I do not believe the partnerships or corp was ever filed late but they were filed with an extension but before 9/15. I am assuming that the AEP will not automatically get applied to these and I will need to file three abatement requests via form 843. (simpler than doing 2848s and calls). Correct?
Couple of questions. For those that include penalties on returns they file, will the IRS refund these amounts automatically? I would assume/hope they would.
Should we now have a discussion as to whether and/or when we should include the penalties on client's returns?
We used to do that, but clients still complained when they got them and then would forget that we told what it would be. Then they blame us and on occasion, post a bad review and we need to take the time to address it. So, we gave in and included penalties on the return and then they were all fine. lol
If this penalty relief is available every time it fits, then effectively the penalty from those code sections is gone. If there is some limit to repetitive use, then we have the issue of this being applied when the error was something else that would be easily cleared. We need to know when this is happening.....
My point is if a penalty is always abated before one can blink, then the penalty is effectively gone.
We have one working where the IRS applied the estimated payment to the spouse (taxpayer error) and we are resolving that by getting it corrected. I don't fully understand what the impact would be of the penalty being automatically abated in that case. We obviously need to actually resolve the issue, and then there is no penalty.
If Kwong gets rid of a late payment penalty in 2020 and 2020 was the only blemish on a 2022 late penalty seeking FTA, do you think FTA would work? (I am assuming Kwong would not apply to this California resident for 2022)
I missed the 3/15 extension filing date on 2 partnerships and 1 S- Corp. I filed them in May and in June, they got penalty letters. I do not believe the partnerships or corp was ever filed late but they were filed with an extension but before 9/15. I am assuming that the AEP will not automatically get applied to these and I will need to file three abatement requests via form 843. (simpler than doing 2848s and calls). Correct?
If the penalties were assessed, the IRS did not apply AEP.
Couple of questions. For those that include penalties on returns they file, will the IRS refund these amounts automatically? I would assume/hope they would.
Should we now have a discussion as to whether and/or when we should include the penalties on client's returns?
1. Yes
2. I never include penalties on a return. I project a balance with penalties and interest and give a pay off. I would continue to do that.
We used to do that, but clients still complained when they got them and then would forget that we told what it would be. Then they blame us and on occasion, post a bad review and we need to take the time to address it. So, we gave in and included penalties on the return and then they were all fine. lol
If this penalty relief is available every time it fits, then effectively the penalty from those code sections is gone. If there is some limit to repetitive use, then we have the issue of this being applied when the error was something else that would be easily cleared. We need to know when this is happening.....
The penalty is not effectively gone. This is no change from FTA - it was always applied first before reasonable cause.
My point is if a penalty is always abated before one can blink, then the penalty is effectively gone.
We have one working where the IRS applied the estimated payment to the spouse (taxpayer error) and we are resolving that by getting it corrected. I don't fully understand what the impact would be of the penalty being automatically abated in that case. We obviously need to actually resolve the issue, and then there is no penalty.
It appears this does not apply to 1041's and 990's. Is that correct? TIA
6651(a) applies to Form 1041; not to Form 990.
If Kwong gets rid of a late payment penalty in 2020 and 2020 was the only blemish on a 2022 late penalty seeking FTA, do you think FTA would work? (I am assuming Kwong would not apply to this California resident for 2022)
No idea. Kwong is uncertain.