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Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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Late filing fees with refund due

Customer Question

2001 return filed Oct.2004, irs kept 3100.00 of 4498.00 refund as late filing fee. No penalty or interest applied and they paid interest on refund. Chances of getting fees removed on appeal?
Submitted: 11 years ago.
Category: Tax
Expert:  Christopher Phelps replied 11 years ago.

The late file penalty is charged at a rate of 5% per month up to a maximum of 25% of the net tax liability shown on the return. If the non-filing is considered fraudulent then it accrues as 15% per month up to a maximum of 75% of the net tax liability.


Section 6651(a)(1) imposes a penalty for failure to timely file tax returns unless it is shown that such failure is due to reasonable cause and not willful neglect. Both elements are required to qualify for the exception. The absence of willful neglect alone is not sufficient.


A delay is due to reasonable cause if you exercised ordinary business care and prudence but was, nevertheless, unable to file the return within the prescribed period. To claim a reasonable cause exception, the taxpayer must file a written statement, signed under penalties of perjury, that affirmatively shows facts sufficient to indicate the existence of a reasonable cause for failing to timely file the return.


Generally, the IRS will consider any good excuse such as death or serious illness, reliance on tax advisor, recods unavailable, inability to pay, mistake, forgetfullness, misfeasence by an agent, wrong advice by the IRS, business pressures, out of the country, natural disaster, etc. It could not hurt to try so go ahead and write a reply to the address on the notice and lay out your case for not applying the penalty.


Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.





Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience: CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Christopher Phelps and other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Christopher Phelps's Post: SPECIFIC AND CONCISE. THANKS.

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