FTA/Reasonable Cause

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    Terrence Power

    This is really two questions. First. Is getting a divorce sufficient proof for reasonable cause when abating penalties for FTF, FTP? I have a client that was assessed about $15,000 for late filing/payment of 2017 taxes, due to her distress of a difficult divorce. If so, any suggestions on how to word the request to evoke “sympathy”? Buzz words?

    Second. Tax Help Software indicates the FTA is not available for 2017. There were penalties in the 3 prior years for late-payment along with not pre-paying, but never late filing. Is there any way to abate the late filing penalty, alone, using FTA? Or will the late payment penalties kill it. I believe not pre-paying (estimated tax) will not blow a FTA. Is that correct?


    Eric Green

    Terry, in the first question I think you need to hit home on the fact that the divorce was such a distraction that it wreaked havoc (were they filing joint or MFS, who got the deductions, etc). It is good if that is the only year they had an issue.

    In regards to the second question, any penalty (other than an estimated tax penalty) will prevent the FTA.

    Terrence Power

    Thanks Eric.


    I have had a hard time with penalties and I’ve had some sad stories. It’s my feeling that they just say no and you have to go to appeals and talk to an actual person to try and get them waived. I’ve yet to take that step as people did not have the money to pay me to continue to fight for them. Since I’ve yet to go to appeals for this issue, I have no idea of the success rate with a sad story to try and get out of penalties. That makes me less likely to want to try.

    Wondering if Eric goes to appeals over penalties and the success rate.

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