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Old 08-14-2016, 08:58 AM   #41
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It often does take that long. It wasn't until 2007 that we were notified that the IRS claimed we owed them more than $31,000 from 2005. It turned out to be my error in forgetting to declare a cashless exercise of stock options on Schedule D in which the taxes were already paid on the profit and the case was closed, but still.... good way to develop heart failure.
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Old 08-14-2016, 09:00 AM   #42
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https://www.irs.gov/pub/irs-pdf/f843.pdf


Especially if this is a first error and you have a clean record with them, it is likely you can get the penalty waived.
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Old 08-14-2016, 09:34 AM   #43
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That was actually a situation where I was sent a letter after about three years. I responded with information showing that they were wrong, and *never* heard back, or so I thought. Two years later I got a letter that was pretty much a duplicate of the first one, although with much higher penalties and interest. I again responded with documentation showing that they (the IRS) had their heads up their ass, and never heard from them again. Of course it's only been about 15 years. The next letter could show up any day.

OK, that makes more sense... I thought they only had 3 years.... they can go longer if they prove fraud...


From what I understand, if they do not do anything in a 10 year time frame they cannot bring it back up... so you are safe...
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Old 08-14-2016, 09:59 AM   #44
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I have seen where abatement of penalties have been granted if you can convincingly show that it was a one time error due to a new situation or oversight, you have a good record of payment, etc. Most common I've seen is the failure to start RMDs when required.....and that penalty is 50% of the amount in question. The IRS will commonly abate the penalty one time. A nice, respectfully worded letter will usually suffice, short and to the point. But pay the amount due (if you agree with IRS calculation) with interest.
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Old 08-14-2016, 10:04 AM   #45
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This brings up a good point about 1099 forms. I have a very small internet business that I use PayPal for. I included all the sales from my website on my Tax forms. I do all sales vis the web site. BUT I use PP or everything. Personal things I have sold that are not business related. I have been selling off a lot of hobby items purchased before the business went into play. I do not put them on my taxes as it is not applicable and is not income.

PayPal just sends out 1 1099 for all and does not differentiate.

I wonder how that will work?
While nothing may come of it, if the IRS asks questions you've set yourself up for an uphill battle. Your first mistake is mixing personal accounts with business accounts. Keep business completely separate from personal financial affairs.
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Old 08-14-2016, 12:05 PM   #46
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I have seen where abatement of penalties have been granted if you can convincingly show that it was a one time error due to a new situation or oversight, you have a good record of payment, etc. Most common I've seen is the failure to start RMDs when required.....and that penalty is 50% of the amount in question. The IRS will commonly abate the penalty one time. A nice, respectfully worded letter will usually suffice, short and to the point. But pay the amount due (if you agree with IRS calculation) with interest.

Good point... pay the amount due plus interest as they will not abate interest.... and add the letter about how you did not get 1099 etc. etc. and as for a waiver of the penalty.... with the money in hand they probably will waive it...


NOW, just an FYI, the IRS keeps track... where I used to work we got a penalty for failure to file on time... it is a Sub S corp, so no taxes due... I mailed it along with many state returns on the same day.... but somehow the date put on the federal was 'late'... they normally do not care, but the previous controller had been late a couple of times... I did not know this... they refused to waive... I had to escalate it a few levels and even go to an advocate... they eventually waived it.... now, all returns are sent certified.... (well, as long as the new controller is doing it right)...
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Old 08-14-2016, 03:26 PM   #47
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I will call them and ask. The penalty is 4 times the interest!
If that works great, but usually the Service wants you to "show them the money"--e.g. pay your interest and penalty and include a request for the waiver and refund of the penalty.
Just sayin
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Old 08-14-2016, 03:45 PM   #48
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I went through this one with Pop's taxes that were prepared by a pro. She screwed it up but caught the error when she did the next years taxes.

She did the corrected (state and fed) and I sent in the dough and they billed me for the interest which I sent in promptly. No penalty.

Maybe if you catch it before they do? Dunno.

I can only advise to do your state stuff now and send in a check. Maybe you can avoid that penalty.
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Old 08-14-2016, 06:57 PM   #49
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For honest mistakes, I don't think they should be able to charge a citizen any more in interest than they pay the same citizen in Savings Bond rates. Also, I think they should be limited to a max of one year interest regardless of how long it takes them to process the return or find the error. Additionally, no penalties for honest (and first time) mistakes. It's not my fault they have made the tax codes so complicated and they can't process them in a reasonable amount of time. (max one year)

When I was working I wouldn't have lasted very long if it took me 18+ months to process incoming paperwork.

Now fraud is a different story.

But as others have said, they write the rules and have the guns.

What a waste of time writing this!
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Old 08-14-2016, 07:24 PM   #50
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What is an honest mistake? How do you tell apart the OP who misplaced a form, vs. me perhaps choosing to ignore it and see if I get away with it or at least get an extremely low interest loan? Or me just being somewhat careless every year and not worrying about mistakes because I get a freebie if I do make one?
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Old 08-14-2016, 07:51 PM   #51
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I've been careless a couple of times and misplaced a 1099. For twelve dollars and fifty cents or there abouts.

Lots of thousands? Never. I would remember lots of thousands -
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Old 08-14-2016, 08:24 PM   #52
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I know it seems crazy, but it was an honest mistake. I really don;t care if anyone else thinks so or not, or really the IRS for that matter. I know, and as my Dad always told me, that's all that matters.

I'll pay the full amount, penalties and interest included. Then I will try to get some relief on it. They either believe me or don't, or give me a break or don't. Guess time will tell.
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Old 08-14-2016, 09:56 PM   #53
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I know it seems crazy, but it was an honest mistake.
I don't think it seems crazy at all. Folks make honest mistakes all the time.

I'm certainly not a fan of the IRS and strongly disagree with a lot of their R&R's. However, I received a tax/penalty letter a few years ago (20k+) and found they do have some flexibility and can apply some "common sense".
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Old 08-14-2016, 11:56 PM   #54
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For honest mistakes, I don't think they should be able to charge a citizen any more in interest than they pay the same citizen in Savings Bond rates. Also, I think they should be limited to a max of one year interest regardless of how long it takes them to process the return or find the error. Additionally, no penalties for honest (and first time) mistakes. It's not my fault they have made the tax codes so complicated and they can't process them in a reasonable amount of time. (max one year)

When I was working I wouldn't have lasted very long if it took me 18+ months to process incoming paperwork.

Now fraud is a different story.

But as others have said, they write the rules and have the guns.

What a waste of time writing this!

I guess someone does not like the IRS...

But, the problem is in the time frame of reporting... not all entities report early in the process.... they do not want to keep coming back to a year to check out if everything is done properly... might as well wait a year and make sure everything has been reported before checking...

Also, they have had funding cuts for many years... their systems are old... so again, not able to jump on paperwork and get it processed quickly...


It is not the IRSs fault that the tax code is hard to deal with.... that is your elected officials.... at least blame the correct people... and the actual people who can fix it....
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Old 08-15-2016, 07:46 AM   #55
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I would call and send in the abatement form also. I have had them abate penalties on the phone. Your error is extremely common. We see it every day several times a day in the preseason tax office. Do not beat yourself up about it. Just plead honest error, it will never happen again, one time occurrence. And let us know if you were successful!
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Old 08-15-2016, 08:06 AM   #56
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I guess someone does not like the IRS...
You think!

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It is not the IRSs fault that the tax code is hard to deal with.... that is your elected officials.... at least blame the correct people... and the actual people who can fix it....
Agree and I had actually addressed that in my earlier comments but erased it since it was getting to political for this board.
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Old 08-15-2016, 09:35 AM   #57
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I know it seems crazy, but it was an honest mistake. I really don;t care if anyone else thinks so or not, or really the IRS for that matter. I know, and as my Dad always told me, that's all that matters.

I'll pay the full amount, penalties and interest included. Then I will try to get some relief on it. They either believe me or don't, or give me a break or don't. Guess time will tell.
They have already done their worst and all that will happen now it that a little interest will continue to accrue. I might send one-third of the money with a explanation and a request for some mitigation or a payment schedule. If they say no you can always send in the rest of the money. I don't really see any jeopardy to you in this approach. If you want to just put it behind you send the money and forget about it.
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Old 08-15-2016, 12:45 PM   #58
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July/August is one of those times people get these letters from the IRS. It appears they have computer time to burn after the spring forms are in, and before the extension forms come in.

My dad had dementia and threw away a few 1099s. His tax preparer swore to me that he asked my Dad "Where is your 1099 for X, we filed it last year." Dad said: "I don't have account X anymore."

2 years later, here comes the IRS letter.
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Old 08-15-2016, 12:52 PM   #59
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I made a call to the number on the CP2000 form. Spoke to a lady who told me to include a letter/note with my response to agreement/disagreement form that is part of the CP2000 letter. She said there was not "Form" to fill out. I hung up, and called back to get another person, which I did. Same answer. Seems the best option is to send the Form back, agreeing to finding and include a letter asking for relief from the penalty. Both said there was little chance wrt the interest.

Worth a try...
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