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Posted by ed on June 8, 2007, 1:22 pm
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>> My client is being charged a penalty for not paying enough
>> estimate taxes. The penalty is being based on the original
>> filing of the 2005 tax return, however I amended the 2005
>> tax return at the end of 2006 (before I needed to file the
>> 2006return). They would not be subject to a penalty if I
>> based it on the amended return. Also on the amended return
>> I marked that the additional refund be used toward the 2006
>> return, however the IRS returned the refund anyway. My
>> question is the penalty based on the original return or can
>> it be based on the amended return?
> The penalty should be based on the amended return. If the
> reason there would be no penalty is because of the refund
> being applied forward from the 2005 amended return, you are
> out of luck if the refund check was cashed. I always advise
> clients to void the refund check and send it back with a
> letter asking that it be applied forward. If however there
> would be no penalty because of a safe harbor, then you
> should write and request abatement of the penalty.
See page 38 of Publication 505. The penalty is based on the
original return because the ammendment was filed AFTER the
original return was due.
ed
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