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Posted by removeps-groups@yahoo.com on May 8, 2008, 1:21 am
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If you file form 4868 and are unable to pay the tax due, the penalty
is 0.5% a month. If you file your taxes and are unable to pay the tax
due, what is the penalty? Is it 5% a month (till a maximum of 25%),
or is it 0.5% a month till October 15, then 5% after that?
Is there a way to file your taxes and still get the 0.5% penalty a
month?
With form 9465, you pay in installments and the penalty is 0.25%. But
there is a chance that your request for installment will be denied if
you were in an installment agreement last year.
--
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Posted by Phil Marti on May 8, 2008, 2:34 am
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> If you file form 4868 and are unable to pay the tax due, the penalty
> is 0.5% a month. If you file your taxes and are unable to pay the tax
> due, what is the penalty? Is it 5% a month (till a maximum of 25%),
> or is it 0.5% a month till October 15, then 5% after that?
The late payment penalty is .5% per month unless it's reduced because you
enter into an installment agreement or increased because you ignore notices.
It never gets above 1% per month, and regardless of how fast it accrues it
can't exceed a total of 25%.
Late filing penalty of 5% per month, to a maximum of 25%, applies if you
neither file nor pay. When it's running concurrently with the late payment
penalty it's reduced by the amount of the late payment penalty, so for the
first 5 months of nonfiling the total penalty is 5% per month.
> With form 9465, you pay in installments and the penalty is 0.25%. But
> there is a chance that your request for installment will be denied if
> you were in an installment agreement last year.
That's because an installment agreement requires that you timely file and
pay future taxes. Otherwise you wind up in an endless cycle of late
payment. This is why it's important to consider that requirement when
setting an installment agreement in the first place. It's better to make
sure you'll be able to pay the taxes that are currently accruing even if it
means it will take you longer to pay off the delinquency.
--
Phil Marti
Clarksburg, MD
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by removeps-groups@yahoo.com on May 8, 2008, 12:01 pm
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> That's because an installment agreement requires that you timely file and
> pay future taxes. Otherwise you wind up in an endless cycle of late
> payment. This is why it's important to consider that requirement when
> setting an installment agreement in the first place. It's better to make
> sure you'll be able to pay the taxes that are currently accruing even if it
> means it will take you longer to pay off the delinquency.
This makes sense. If someone enters into an installment agreement for
the first time, they should be aware of the above.
But what if the person did an installment agreement last year and it
is paid off in full, and they have lots of tax due this year? If the
IRS does not let them enter into an installment agreement, then what?
Borrowing money on a credit card would be 20% annual interest and they
would still be in a cycle of late payments, except these late payments
would go to the credit card company.
So the question is, would the request for installment agreement be
accepted or denied? It is not automatic acceptance if you had an
installment agreement agreement in the previous year, but then again
that installment plan has been paid off in full.
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Paul Thomas, CPA on May 8, 2008, 2:08 pm
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>
>> That's because an installment agreement requires that you timely file and
>> pay future taxes. Otherwise you wind up in an endless cycle of late
>> payment. This is why it's important to consider that requirement when
>> setting an installment agreement in the first place. It's better to make
>> sure you'll be able to pay the taxes that are currently accruing even if
>> it
>> means it will take you longer to pay off the delinquency.
>
> This makes sense. If someone enters into an installment agreement for
> the first time, they should be aware of the above.
>
> But what if the person did an installment agreement last year and it
> is paid off in full, and they have lots of tax due this year? If the
> IRS does not let them enter into an installment agreement, then what?
Ask again. Failing that, keep making payments on your shcedule.
> Borrowing money on a credit card would be 20% annual interest and they
> would still be in a cycle of late payments, except these late payments
> would go to the credit card company.
>
> So the question is, would the request for installment agreement be
> accepted or denied?
If there's not a current IA in place, then they'll accept the new one if it
otherwise meets the criteria.
> It is not automatic acceptance if you had an installment
> agreement agreement in the previous year, but then
> again that installment plan has been paid off in full.
I've had clients in IA's that had to redo the IA to tack on the balance of
the current year even though they made what was thought to be adequate
estimated payments.
It's not an automatic "NO" either.
If you made the installments as agreed, and made estimated payments as well,
but still end up being short, they don't beat you over the head about it.
If anything, you are the exception, as there are lots who do not make the
installments as agreed, or the estimates, or some combination.
--
Paul A. Thomas, CPA
Athens, Georgia
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Harlan Lunsford on May 8, 2008, 3:50 pm
Please log in for more thread options Phil Marti wrote:
>
>> If you file form 4868 and are unable to pay the tax due, the penalty
>> is 0.5% a month. If you file your taxes and are unable to pay the tax
>> due, what is the penalty? Is it 5% a month (till a maximum of 25%),
>> or is it 0.5% a month till October 15, then 5% after that?
>
> The late payment penalty is .5% per month unless it's reduced because you
> enter into an installment agreement or increased because you ignore notices.
> It never gets above 1% per month, and regardless of how fast it accrues it
> can't exceed a total of 25%.
>
> Late filing penalty of 5% per month, to a maximum of 25%, applies if you
> neither file nor pay. When it's running concurrently with the late payment
> penalty it's reduced by the amount of the late payment penalty, so for the
> first 5 months of nonfiling the total penalty is 5% per month.
>
(snipped....
On another board we've discussed a situation in which form 4868 is filed
without any additional tax being paid. There were posts from tax pros
who stated that clients had not been billed the 5% per month FTF penalty
even though their balance due was substantial. only the other penalty,
0.5% and of course interest were charged.
But no one could opine or offer evidence as to just when IRS policy
changed or why.
Can anyone here say?
ChEAr$,
Harlan
--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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