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Tax Question IRS I got penalties abated for 2009 taxes, but…

Tax Question IRS I got penalties...
Tax Question IRS
I got penalties abated for 2009 taxes, but the payment for the penalties was paid more than 2 years ago. Will they be refunded or applied to another year. Please provide IRS references.
Thanks
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Answered in 14 minutes by:
3/27/2018
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,644
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The IRS will not issue a refund for penalties that were abated if there is additional tax liability for other years.

Similarly, if you file a tax return for a current year and are due a refund, you will not receive the refund. It will be applied to any outstanding tax liability.

If any refund exceeds your total balance due on all outstanding liabilities including accruals, you will then receive a refund of the amount over and above what you owe.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 4 months ago
Barb,I'm talking about the 3 year statue of limitations or 2 years since taxes were paid. 2009 is already paid off including the penalties and has been since 2013. I just called and got the penalties abated, around $3,500. Will this amount be used to offset other years or due to the statute it won't have a credit?

Thank you for the clarification of your question.

The $3500 will be used to offset other tax liability that you owe.

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Customer reply replied 4 months ago
Can you provide an IRS reference? How come it isn't past the statue?

I'll have to research the IRS reference.

You're not receiving a refund. The penalty abatement reduces any outstanding amount due.

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Customer reply replied 4 months ago
but the amount was paid over 2 years ago.
Customer reply replied 4 months ago
the outstanding amounts are for future years

I understand.

Normally, it only makes sense to request a penalty abatement when the tax liability has been paid. If you request a penalty abatement early on, the outstanding balance that has not been paid will accrue a penalty.

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Customer reply replied 4 months ago
2009 had a penalty of $3,500 was paid totally
Balance due from 2014 is $40,000.
Will the $3,500 offset the $40,000?

Yes.

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Customer reply replied 4 months ago
Please provide references. Thanks!

I will post them here as soon as I can.

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Customer reply replied 4 months ago
Thanks!

You're welcome.

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I conferred with a colleague of mine, and penalty abatements are treated the same way as refunds as far as statute of limitations.

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.

If you requested the abatement within two years of making payment, the penalty amount that was abated will reduce your 2014 tax liability by $3500.

Make sense?

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,644
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Have a great day!

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