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Discussion Forum Index --> Advanced Tax Questions --> Amend form 1041 or Draft letter to IRS requesting penalty abatement
Discussion Forum Index --> Tax Questions --> Amend form 1041 or Draft letter to IRS requesting penalty abatement
IdahoCPA (talk|edits) said:
| 8 November 2009
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| My client's mom passed away October 2008. All assets were held in a trust that was created upon her death. My client was informed that she needed an EIN for the trust, so she filled out an SS-4 and wrote that the year end was September (year end is not specifically mentioned in the trust docs). When my client came to me in October, she informed me of the trust and did not tell me it was intended to be a fiscal year end trust. I prepared the return showing income from the date of death through Dec 31, 2008. There was $2000 tax due with the filing of the return, which was paid October 15, 2009. My client just received a letter from the IRS with a "failure to file" penalty and a "failure to pay" penalty. Apparently no extension was filed for the trust, as she was not my client at the time. My question is this: How should I proceed? Should I draft a letter to the IRS requesting that the abate the penalties or should I try to file an amended return which reflects the fiscal year instead of the calendar year (in which case the return would not yet be due, and no penalties assessed)? If so, can I make the 645 election on the amended return? Thank you, in advance, for your thoughts on this.
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Death&Taxes (talk|edits) said:
| 8 November 2009
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| Would this trust qualify for a fiscal year? As I read the question, it is not an estate, where you have that option.
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Kevinh5 (talk|edits) said:
| 8 November 2009
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| but I believe that needs to be made on an original return by the initial return's due date
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IdahoCPA (talk|edits) said:
| 8 November 2009
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| Do you know if the SS-4 (stating a September year end) is authority enough to claim the taxes were incorrectly filed and to then re-file a fiscal 1041 with the 645 election? Or does the filing of the 1041 as a calendar year trust (not estate) count as the original filing and therefore voids any opportunity to make the 645 election? I cannot find anything to indicate one way or another.
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R2 (talk|edits) said:
| 9 November 2009
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| Form SS-4 does not constitute a fiscal-year election.
Yes, the 645 election can be made on an amended return. See Reg. 1.645-1(d)(2)(B).
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Dennis (talk|edits) said:
| 9 November 2009
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| Not quite my understanding, although as always I shudder at the thought of disagreeing with Riley. The referenced Reg., as I understand it, will allow you to elect under ยง645 on the first 1041 for the estate and requires the amendment of an original Trust tax return. (Which means if you filed the return as a Trust you still have time to get it right). Bear in mind, however, you are electing on an original return for the estate and amending the Trust return, not electing on an amended return.
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