Penalty for late filing of 1065

[cred65]

Originally had a problem with e-filing and was forced to manual file. Since the extension deadline is now 9/15/09 the return was late.

Client received a penalty notice $180 and I sent letter requesting abatement on 11/30/09. Yesterday the client received CP504 threatning a levy. In the meantime I had received no answer to the 11/30/09 letter. I have sent a second letter yesterday as a follow up on the original request of 11/30/09.

Any suggestions?

TIA

[TAXBILLY]

Hopefully you sent the letter certified mail.

taxbilly

[jainen]

>>had a problem with e-filing and was forced to manual file. Since the extension deadline is now 9/15/09 the return was late<<

Call the number on the collection notice and ask them if the abatement request has been received. Be prepared to fax another. Three weeks is not long enough for processing, so don't worry about, like, Appeals or Taxpayer Advocate. You'll get it straightened out soon enough. And in spite of my next paragraph, I'm sure the penalty will be removed.

In fairness to the IRS, they have no requirement to suspend collection action just because an abatement request is pending. In fact, it's normal to request abatement AFTER payment. In my understanding, most abatement requests are not technically adequate anyway. They should be sent to the Director of the Service Center where the return was filed, and have wording specified by Reg 301.6651 to declare the facts under penalty of perjury. Also, I don't know what you gave for reasonable cause, but I hope it was more than you said here because when e-file fails on the due date, the deadline is extended for manual filing.

[JohnH]

I agree with the above, but I'd also conference the client in when calling IRS. It eliminates one other potential obstacle (where's the POA?) and gives you a chance to say to the person at IRS "I assured (the client) before we called that you folks are reasonable when it comes to working out these situations." I've never yet had one to say "No we're not!".

[jainen]

>>the client received CP504 threatning a levy.<<

By the way, this doesn't sound right to me. If the IRS is sending an intent to levy as the second notice of a $180 penalty, they have suddenly gotten much more aggressive. I would guess there is something more going on here.

But if that's all there is, be sure to look at Rev. Proc. 84-35 which offers almost automatic penalty abatement if both partners filed their own returns on time.