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Subject Author Date
Tax Penalty Carol EA 06-05-2007
Posted by Carol EA on June 5, 2007, 3:20 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?

Thanks for your help
Carol EA

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Condor on June 6, 2007, 4:39 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 ES penalty is based on the original tax assessment
unless the amended return was filed for the purpose of
amending the filing status from married filing separate
(MFS) to married filing joint (MFJ).

See Revenue Rulings 83-36 and 80-355.

Condor

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by candaexpress on June 6, 2007, 4:39 pm
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I think estimated taxes are against a specific period and
need to be remitted w/ IRS by a specific date. If you do not
pay enough by the due date for each payment period you may
be charged a penalty even if you are due a refund when you
file tax returns (final or amended).

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Mike Wellman on June 6, 2007, 4:39 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.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Seth on June 8, 2007, 1:22 pm
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> My client is being charged a penalty for not paying enough
> estimate taxes.

For which year?

> 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.

So is it 2005 for which the penalty is charged, or 2006?

> Also on the amended return
> I marked that the additional refund be used toward the 2006
> return, however the IRS returned the refund anyway.

Was using the refund for 2006 the thing that caused there to
be no penalty for 2006 based on the amended return?

> My question is the penalty based on the original return or can it be
> based on the amended return?

If the answers are "2006", and "yes", then if he cashed the
check you're out of luck. If he returned it to the IRS with
a note that it was supposed to be carried forward for
estimated taxes, he might win.

Seth

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

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