Does IRS waive or reduce penalty for late filign of 1120 S

[Naveen Mohan from New York]

I have a client whose 2012 1120 S return I prepared but I forgot to efile because he was on an extension and it simply slipped through cracks since ATX does not have any alert/reminder of a return prepared but not efiled. 

 

However I did include his K-1 in his personal return in a timely manner and he paid his income tax on Subchapter S profit in a timely manner.

 

do I have a case for waiver of penalty or do I just have to suck up and pay the penalty. It is pretty hefty penalty.

 

Morally I cannot ask client to pay the penalty because it was my oversight. 

 

thanks for your help.

 

Naveen Mohan

[Lion EA]

I have used the partnership abatement citing Rev Proc 84-35 for S corporations and had it work.  Worth a try.

[OldJack]

Before e-file it was the taxpayer's responsibility to file their tax return.  E-file helps only the government with processing and now has become a source of government revenue.  How did we let that happen?

[rfassett]

I agree with Lion (AND OldJack).  However, I would not editorialize about it being your fault.  I have used the RP 84-35 argument only to have the IRS respond that they are basically ignoring all that and abating the penalty under the first time offender principle.

[Randall]

I've even argued that several years were the 'first' time (because they were all at once, client had no activity, and didn't know a filing was required) and got penalties waive.  Originally IRS waived year one, but charged for each of the other years.

[JohnH]

The First Time Abatement guidelines are clearly spelled out in the document linked below - scroll down a ways to get to this provision---.> 20.1.1.3.6.1 (08-05-2014) First Time Abate (FTA)

http://www.irs.gov/irm/part20/irm_20-001-001r-cont01.html

As Old Jack said, e-filing puts the tax preparer in the line of fire, whereas paper filing puts the responsibility on the taxpayer - where it properly belongs. This is why I continue to obtain waivers from the e-flinging requirements, and plan to do so until I retire. I'm a tax preparer, not a tax filer. I'll do my job by preparing your return - you do yours by satisfying your filing responsibilities. I'm not interested in becoming a data entry clerk for the IRS, not am I interested in assuming other people's responsibilities.

As for the OP by Naveen, your client can probably obtain the first-time penalty relief by following the FTA procedures. I recently had one who never got around to filing his 1120S which had 3 shareholders. Glad he had to worry about the $7K penalty rather than me. It helped me sleep better at night and nap better by day. Affter a couple of letters which I wrote for him, and which IRS ignored, he finally called IRS and they took care of the abatement on the telephone.

[SFA]

I too have been able to ask and receive penalty relief for late filing of 1120S returns. When writing don't BS, lay out the problem, how it happened, and why they should consider penalty relief. Use other preparers examples and war stories as a way to get a handle on the situation. Then like a dog, don't let go until you exhaust every channel available for relief.

 

Naveen Mohan--you can and will succeed here if you methodically stay on track and push through. In a few months, I'll be waiting to hear "the rest of the story."

 

In the meantime, don't let this bump break your pace to the April 15 finish line.

[Abby Normal]

Personally, I love efiling for the instant receipt acknowledgement. I've also had cases where taxpayer was unavailable at the final deadline and I've had them email me authorization to transmit with a statement they will sign the efile forms when they return.

 

I also like that I don't have to rely on an unskilled IRS temporary worker properly entering the return.

[OldJack]

>>When writing don't BS, lay out the problem, how it happened, and why they should consider penalty relief.<<

 

Keep it extremely brief and clear enough for a 5th grader to understand when dealing with the IRS!  That's about the limit of their intelligence and decision making.

Edited March 22, 2015 by OldJack

[Abby Normal]

Agree with keeping it brief and clear, as all business communications should be. But I've had plenty of intelligent and competent IRS employees help me over the years, and I am truly grateful for them. It can be a difficult job.

[Randall]

Every now and then, I'll go to the Efile Manager, filter by those marked complete and review the status to make sure they're all accepted.  I do that in case I've marked something complete by mistake.  I also like to get extensions filed first week of March and first week of April even if I think I can complete by due date.  Some things still might fall thru the cracks though.

[Terry D EA]

Since the inception of the requirement by the IRS to e-file all returns, I wish that ALL software companies would have some form of alert that a return has been created and not e-filed. I have used ATX, Taxwise, Taxworks (TRX stuff), Tax Slayer, evaluated Pro-Series, Drake and now am using OneDesk and none of them offer this feature.

Edited March 22, 2015 by Terry D

[Abby Normal]

We just check the efile screen in ATX and see what has not been sent, especially when it's the last few days.

[Abby Normal]

Every now and then, I'll go to the Efile Manager, filter by those marked complete and review the status to make sure they're all accepted.  I do that in case I've marked something complete by mistake.  I also like to get extensions filed first week of March and first week of April even if I think I can complete by due date.  Some things still might fall thru the cracks though.

 

Likewise, we filter efile manager by created and held to see what has not been sent. We also file extensions first of March and first of April.