IRS Penatly and Interest Calculator

[ILLMAS]

Does anybody know of a website that can help determine penalties and interest for a balance due (for prior years)? Or is there a way in ATX to calculate it? I have two tax payers that brought in a couple of years, and they both want to pay in full, instead of waiting to recieve a letter from the IRS, I know calculating by hand will not be perfect because of time it takes to get to the IRS. TP don't mind sending extra, but would like to pay as accurate as possible.

Thanks

[Eli]

Have you tried the 'Late Filing Penalty & Interest' tab on one of the returns in your return manager?

At the bottom under form 1040 there is a tab that says 'Pages & Worksheets' The 2nd to the last one is Late Filing Penalty & Interest.

Eli

[Pacun]

I don't think ATX makes a good calculation for that.

If you owe 2,000, the first month you will pay 10% for not paying and not filing, which makes it 2,200, then you calculate the interst. You do that for 5 months and then you add only interest until paid.

If a client is late more than 12 months, I tell them that they will owe double as much. In the case above, I will tell them that they will owe about 4K.

[kcjenkins]

If you have enough use for this to be willing to buy software, TimeValue has the best I have ever seen.

http://www.timevalue.com

http://www.timevalue.com/products/taxinterest/overview.aspx

This program does both federal and state, and is wonderful for the complex amendments, etc.

[jefftucker]

You can use this free IRS Penalty & Interest calculator that is easier to use than timevalue.

[SFA]

I don't know if this is still true, but here is my story. Years ago I had client who had late filing penalties and late payment penalties that were calculated by the IRS.The penalties were quite large.

I called them to ask for leniency and for penalty abatement. Luckily, ALL the penalties were removed, EXCEPT, the "self-imposed" calculated underpayment of estimated taxes that the 1040 program calculated and was included on the original return.

The agent told me that she could not remove or negotiate "self-imposed" penalties.

Take if for what it's worth. That was my experience.

Perhaps this client has some reasonable cause to reduce the penalties?

I do not anticipate the penalties, but in some cases have verified the correctness of the penalty imposed.

A good example is when clients convert their balance due to an installment agreement. The underpayment penalty is reduced in such a case. I have had to call the IRS and have that corrected.

[michaelmars]

The agent told me that she could not remove or negotiate "self-imposed" penalties.

I have had the same situation.