March 7, 2019 at 11:21 am #13156
Hello. This is my 1st time posting here and asking a question.
I have a client who initially owed the IRS $13k+ incl. penalties and interest for a late filed 2016 return.
A “refund” of $6,007 from 2017 was applied to the balance due on 4.15.18
On 12.10.18 the IRS Reduced or removed penalty for late payment of tax (Code 277) for (-$192.69) and they also reduced the interest charged for late payment (Code 197)
Current estimated balance due as of this morning is $7,237.57. When I pulled Account transcripts, it shows a (Code 166) Penalty for filing tax return after the due date for $2,141.32 and a (Code 276) Penalty for late payment of tax in the amount of $904.11. Both penalties posted on 10.22.18. I went all the way back to 2000 and there were no other penalties assessed for the client.
I’m looking at FTA, but my questions are:
1. Since they did an automatic reduction of the penalty in December, does that make the FTA null and void?
2. If I’m understanding correctly, we have to have the client already set up in an installment agreement for the entire remaining balance due (incl. the Penalties we are wanting to get abated) before we can file for the FTA – is that correct?
3. Do we apply for FTA for the entire Penalties assessed for the tax year (FTF & FTP) totaling $3,045.43? or only the largest Penalty, which is currently the FTF @ $2,141.32?
4. If we apply for the entire penalties assessed for the tax year, since there is a FTP, do we need to wait until the tax liability is paid before requesting the FTA since the FTP keeps accruing until the balance is paid in full?
Thank you in advance to anyone who can assist. I hope that I have provided all of the necessary information needed.
Michelle R BrownMarch 7, 2019 at 11:35 am #13160March 7, 2019 at 11:35 am #13161samanthaBlocked
I have been largely unsuccessful with removing FTF, FTP and accuracy penalties. I find the process of trying to remove them very confusing and now avoid taking it on as work. I’ve even had IRS agents run the report and tell me the client was not eligible but they did not know why either. Perhaps Eric can do a video for us on this topic.March 7, 2019 at 6:56 pm #13180
I would call and request the FTA. Is there any reasonable cause argument for the late filing?March 8, 2019 at 1:29 pm #13193
Mr. Green, the TP says that “life just happened” and he didn’t file. (TP was 1 year behind in filing)
Do you request the FTA on the FTF only or on both the FTF & FTP since they were assessed on the same day for the same return year?
Thank you in advance for your assistance.March 9, 2019 at 5:17 am #13214
I would request it on both. “Life Happened” is Taxpayer speak for “I’ve got nothing…”. No reasonable cause for that, unless the “life happening” is a disaster, medical or otherwise.March 13, 2019 at 3:18 pm #13302
Spoke with TP today and this was his response “I suffer from severe depression and have battled this chronic issue since I was first diagnosed with it at the age of 18. It is often difficult for me to manage tasks that are outside of my comfort zone in the work environment. Taxes are at the top of this category so hopefully that helps all parties to better understand my situation.”
So, I guess that I request FTA 1st, and if that doesn’t pass, then I will go for a Reasonable Cause Penalty Abatement.March 13, 2019 at 9:04 pm #13311
I would call, request the FTA and set up a streamlined installment agreement. Will probably be $125 a month.March 19, 2019 at 11:50 am #13376
Ok, so I tried to get the FTA, and the agent said that the client did not qualify because there shows a “Reduced or removed penalty for late payment of tax” in the amount of $192.69 with code 277 on 12.10.18 for the year in question. This is the same date that the return was filed and the refund from 2017 was transferred to the balance owed for 2016.
BUT, when I run the client through THS, the program says the client qualifies for FTA.
How do I properly proceed?
- This reply was modified 2 years ago by Sandi Leyva.
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