The Generosity of the IRS

[ILLMAS]

TP had an over payment of $400 from 2019 applied to 2020 and an over payment of $3,000 applied to 2021 estimated tax payments, TP receives a check for $3,000 today.  IRS check is for the period of 12/2019 for $3,000 plus some interest and when I called the IRS, I was told since the TP didn't have a balance due for 2019 and 2020 the IRS released the over payment, the options the TP has, was to give send it back (voided) to the IRS or to cash it and send the payment back with the 4th quarter ES payment 

 

[Abby Normal]

Sending it back with a note to apply it all to 21 is the best option.

[Lee B]

7 minutes ago, Abby Normal said:

Sending it back with a note to apply it all to 21 is the best option.

Sure, but how long will it take them to open the mail and handle the check correctly?

[Abby Normal]

4 minutes ago, cbslee said:

Sure, but how long will it take them to open the mail and handle the check correctly?

Too long, but time is on your side.

[DANRVAN]

I had a similar experience with a C-Corp. which cashed the check and wrote a makeup check for the estimated payment.

As expected an IRS letter come with an estimated tax penalty.  I made a  call to the TP hotline and was able to waive the estimated tax penalty due to the circumstances.

 

 

[Lee B]

7 minutes ago, DANRVAN said:

I had a similar experience with a C-Corp. which cashed the check and wrote a makeup check for the estimated payment.

As expected an IRS letter come with an estimated tax penalty.  I made a  call to the TP hotline and was able to waive the estimated tax penalty due to the circumstances.

 

 

How long did it take you to get thru on the hotline?

[Abby Normal]

1 hour ago, cbslee said:

How long did it take you to get thru on the hotline?

That was probably a story from the good ole days when the Practitioner Priority line was not tied up by business that sell places in the queue.

[DANRVAN]

1 hour ago, cbslee said:

How long did it take you to get thru on the hotline?

Lately it has been great.  I call after 6 pm Pacific time and they have picked right up in the last two weeks.

[kathyc2]

The penalty for underpayment is 3%.  The interest paid on overpayments is 3%.  Probably a little difference with timing, and the interest received will be taxable, but I certainly wouldn't be opening a can of worms by trying to return it for what will likely amount to less than $25.