Penalty for late filing of Form 1065

[Taxizen]

The client brought records late.

IRS charged $720 for late filing (2008 Form 1065) penalty ($90 x 2 partners x 4 months).

The problem is that the business was closed because of slow business this year. And it is a lot of money to the partners.

Are there any ways to ask for the waiver of the penalty?

Any experiences or comments are appreciated.

[JohnH]

See Rev. Proc. 84-35

[TAXBILLY]

http://www.legalbitstream.com/scripts/isys...y/irl3c7b/1/doc

taxbilly

[Lion EA]

I've used the following when the partners DID report on their personal returns but forgot !! to mail their partnership return:

All two (2) partners, NAMES & SS#s, reported all their shares of income and deductions timely on their joint income tax return Form 1040 even though the Form 1065 for PARTNERSHIP NAME, LLC, 06-XXXXXXX, was late. Therefore, the partnership meets the criteria specified in Rev. Proc. 84-35, which says in part: “A domestic partnership composed of 10 or fewer partners and coming within the exception outlined in section 6231(a)(1)(B ) of the Code will be considered to have met the reasonable cause test and will not be subject to the penalty imposed by section 6698 for the failure to file a complete or timely partnership return, provided that the partnership, or any of the partners, establishes, if so required by the Internal Revenue Service, that all partners have fully reported their shares of the income, deductions, and credits of the partnership on their timely filed income tax returns.” We trust that you will remove the penalty due to reasonable cause for small companies.

[Taxizen]

Thank for all your responses.

It will help the taxpayers a lot.

[JohnH]

Are you going to bill them $360 for researching the issue and writing the letter? Even if you discount that amount down to some lower figure, it's still a bargain for them.

[jainen]

>>the business was closed because of slow business this year<<

How does that constitute reasonable cause for not filing last year's return? If they got their personal returns under the extension, maybe they can use the small business revenue procedure. Well, the IRS is pretty tolerant anyway. But really, are these guys just flakes or what? What was the tax advisor's role in missing the 1065 extension?

Why didn't they file on time? Did SPECIFIC outside events interfer with the normal conduct of business? Did the market reversal generate legal problems that used up all the time? Were they unable to pay bookkeeping so they didn't have access to all their records? Find out what was going on, then you'll know how to treat it.