Failure to file and pay penalty notice_IRS

[SVS]

Hello,

I filed 1120 for my client on 5/15/2017, but ATX did not calculate the interest and penalty. Hence got the notice from IRS. My question is that why ATX dId not calculate it or I missed something.

I would also like to know if I can request to IRS for abatement.

 

Thanks in advance

[Lynn EA USTCP in Louisiana]

There's a special page you have to click on and tell ATX to calculate the interest and penalty.  You have to enter the date the return is being filed and the date the tax will be paid.

 

[Catherine]

I have never found these calculations to be better than somewhat accurate, and decided a year or two ago that it was better for my clients (ymmv) to warn them of a penalty/interest letter to come.  When I was calculating (allowing the program) to calculate, invariably the clients would still get letters - for whatever small amount the calculations were off by; I believe the smallest amount I saw was less than $5 difference - the clients would immediately call ME, all upset (with me!) because they got "more" penalties.   Even though of course they had been told the calculations are approximate, you will get a letter even if it's spot-on, showing the breakdown, etc etc etc.  Rather than being tempted to be snarky to my clients, I now just tell them "I can't calculate these accurately; they'll figure them out and you'll get a letter."  I still get the calls - but at least they're just "I got this letter, do I pay it?" calls rather than angry with me because they got what I told them to expect.

[Abby Normal]

6 hours ago, Lynn EA USTCP in Louisiana said:

There's a special page you have to click on and tell ATX to calculate the interest and penalty.  You have to enter the date the return is being filed and the date the tax will be paid.

 

You also have the enter the interest rates for each quarter as they are announced during the year.

[SVS]

Thanks everyone for the response. 

 

[SaraEA]

We use Ultratax for tax prep, and it too does not calculate interest and penalties with any accuracy. I just explain to the clients that IRS interest rates change every month so I can't do the math; plus we don't know what day the IRS will receive their check.... just wait for them to send you a bill.  I also write on the instruction sheet that tells them how much to send and where that "IRS will bill for interest and penalties--just pay it."  Still get the phone calls though....

[Catherine]

1 hour ago, SaraEA said:

"IRS will bill for interest and penalties--just pay it."

I don't do that, because more often than not the IRS sends its letter before they post the client's check payment.  So the letter includes the amount of the already-sent-in-but-not-included check.  I tell clients to check with me first.  Just today I had someone who sent in a little extra, so they did not even owe the amount of penalties plus interest - just the difference between the letter amount and what they had sent in.  Told them to pay that difference but include a copy of the cashed check.

[Abby Normal]

MD was sending out letters 3 days after October filings. The one time the government should be less efficient and wait two weeks.

[Max W]

SVS asked about penalty abatement.

Use Form 843,  write "FIRST TIME ABATE" across the top.  As long client has a clean record going back 3 years, it should work.

https://www.irs.gov/pub/irs-pdf/f843.pdf

 

[Richcpaman]

On ‎11‎/‎14‎/‎2017 at 4:27 PM, Abby Normal said:

You also have the enter the interest rates for each quarter as they are announced during the year.

WHY?????

Every time I open the stupid program, it runs an Update.  Why doesn't the Update post the most recent interest rates when they are announced?

Another annoyance of this program.

Rich

 

[Abby Normal]

On 11/24/2017 at 12:21 PM, Richcpaman said:

Why doesn't the Update post the most recent interest rates when they are announced?

I submitted that very suggestion in the official Enhancements forum, just last week.

Tip: Use customize master forms to enter the interest rates.

[JohnH]

My approach is similar to Sara & Catherine's.  I run an estimate, then add a little to it.  I tell the client to expect a follow-up bill from IRS for about that amount,  and to send me an email or text with the final figures. My answer is almost always "That looks right.  It's a little bit less than we originally estimated, so just send in a check for $ XXX.XX and you're done."