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Penalty for late filing of partnership LLC tax return, not…

Penalty for late filing of...
Penalty for late filing of partnership LLC tax return, not eligible for Rev Proc 84-35 relief because one of the partners is a foriegner
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12/13/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,193
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi William. My name's Lane ...

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986

...

What exactly is the question? I see the statement's you made. Are you just looking to verify this?

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Customer reply replied 5 months ago
I am trying to get the late filing penalty abated, but it is my understanding that rev proc 84-35 will not work
Customer reply replied 5 months ago
I am trying to get the late filing penalty abated for an LLC, Form 1065 which has a foreign partner

I'm so sorry ... didn't get the alert that you had come back.

...

ok, let me look at this

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Why do you believe that reasonable cause cannot apply here?

...

From Chief Counsel Memo Number:###-##-####/p>

...

"... we conclude that Rev. Proc. 84-35 does not provide an automatic exemption to partnerships from the requirement of filing a Form 1065. Neither I.R.C. § 6031 nor I.R.C. § 6698 contain an exception to the general filing requirement set forth in I.R.C. § 6031(a). Although the I.R.C. § 6698 penalty may be avoided if it is shown that the failure to file a complete or timely return was due to reasonable cause, such relief may be granted under Rev. Proc. 84-35 if the partnership meets its requirements and examiners follow the procedures set forth in IRM 20.1.2.3.3.1."

...

Are you referring to Sec. 6031(e)?

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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,992
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Different expert here – my name is ***** ***** please allow me to provide you with information you will find helpful in abating the late filing penalty.

You are correct. If there is a foreign partner, you cannot use Rev Proc 84-35

BUT

You can use the First Time Penalty Abatement Waiver if the taxpayer qualifies.

See the following: https://www.thetaxadviser.com/issues/2013/jul/buttonow-july2013.html

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Barbara
Barbara, Enrolled Agent
Category: Tax
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Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Thank you for the positive rating of my answer. It is very much appreciated.

Happy Holidays to you and your family!

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Original expert here. Again, although FTA may apply. First, be sure your client qualifies:

...

First Time Penalty Abatement policy if the following are true:

  • You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.
  • You filed all currently required returns or filed an extension of time to file.
  • You have paid, or arranged to pay, any tax due.

And as mentioned when we discussed this, Abatement for reasonable cause preserves FTA for another year.

...

Taxpayers can request relief from failure-to-file, failure-to-pay, and failure-to-deposit penalties in three ways, depending on their situation:

  • Before the IRS assesses a penalty, the taxpayer can file a penalty nonassertion request with a paper return to request that the IRS not automatically assess a penalty.
  • After the IRS has assessed a penalty, the taxpayer can request penalty abatement, typically by writing a penalty abatement letter or by calling the IRS. Tax professionals can also request abatement using IRS e-services.
  • After the taxpayer has paid the penalty, the taxpayer can request a refund using Form 843, Claim for Refund and Request for Abatement.** The taxpayer must file the claim within three years of the return due date or filing date, or within two years of the date the penalty was paid.

...

** Form 843, Claim for Refund and Request for Abatement, does not allow requests for penalty abatement under FTA. The form allows abatement due to erroneous written advice by the IRS, reasonable cause, or other reasons allowed under the law. FTA is an administrative waiver and does not qualify as an “other reason allowed under the law.”

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