Discussion:Form 1065 late filing penalty

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Discussion Forum Index --> Advanced Tax Questions --> Form 1065 late filing penalty


Discussion Forum Index --> Tax Questions --> Form 1065 late filing penalty

Hogback1 (talk|edits) said:

25 July 2010
My client a LLC filing as a partnership 1065 Got a notice from the IRS dated July 19, 2010 for a penalty of $810 for a violation of code section 6698 (a)(1). I have read this code section and this tax return was filed before the 2/15/2010 deadline. My letters always inform clients to mail returns by cert mail return receipt requested.

The tax return was mailed on time but he mailed it regular mail, not certified, but he did mail it on time. so technically he has no proof it was mailed when he said it was mailed.

I spoke with the IRS and they said they got it on April 20, 2010 and this is why they assessed the penalty.

This was the final return for this business. the business has no assets and no cash to pay this penalty.

Should i type a letter to the IRS requesting abatement of the penalty by stating that he mailed the return on time. Is there any way to get a proof of mailing after the fact.

I would appreciate any help on this situation.

Kevinh5 (talk|edits) said:

25 July 2010
yes, no

but testimony of regular business practice and/or reasonable cause might help, as well as all of the other threads on small partnership penalty abatements that you found when you used the yellow search box (which is what I'd do)

TTMM (talk|edits) said:

25 July 2010
See if Rev Proc 84-35 applies. Usually does. Plus if they had never filed late before then you could just beg. The IRS has been abating first time offenders for a variety of penalties.

Solomon (talk|edits) said:

25 July 2010
SCA 200135029

Tax Writer (talk|edits) said:

26 July 2010
I spoke with the IRS and they said they got it on April 20, 2010 and this is why they assessed the penalty.

I would ask for penalty abatement first (nicely). And if they decline, then ask for a copy of the postmarked envelope. They are suppossed to keep it; I've found them in all my FOIA requests. When I worked for the State of CA, I was required to keep the postmarked envelopes that the vendor invoices came in, as well.

If that doesn't work, then I would say the client is on the hook for the penalty. I feel like you gave him fair warning if you told him to send it certified mail.

Tax Writer

Mr cheese (talk|edits) said:

26 July 2010
Personally, I think that the client dropped the ball on this one.....The client's word seldom holds water in my book. They're always claiming to have mailed out the return on such and such a date. I bet they held on to that 1065 for so long that they forgot all about it until after the April 15th due date and now they're crying about a lousy 810 bucks. Also, you told them to mail it certified or registered mail, but did they listen? No...they must of thought that the post office fee for certified mail ($4.00 or so) went way over their company's budget. What a bunch of lazy cheapskates!

Ok, now that I'm done bad mouthing your clients, I say you have a very good case for abatement. Due diligence, reasonable cause, no willful neglect...etc...all the usual defenses can be made. The only defense you don't have is the old...."blame prior council" defense. I love to place the blame on the previous accountant or lawyer in order to make my client look like the victim and smell like roses. It usually works well for Rev. Proc. 2003-43 cases.

I think that your odds are more than 50/50 doing a Rev Proc 84-35. The IRS seems to be very, very lenient on partnerships when it comes to Title 26 Sec. 6698 violations.

The only problem I see that you have is in determining if an $810 penalty warrants an abatement letter? My abatements aren't cheap and it usually takes a damn good abatement package if you want to persuade the IRS to rule in your favor. I can never do it over the phone though....I've taken a wage garnishment off with a phone call to the FTB, but the IRS is way too by-the-book. Some guys may have that IRS charm that makes the agents in the cubicles blush, but I don't do well over the phone....I'm better on paper.

DavidG (talk|edits) said:

26 July 2010
For the future, another reason to efile all returns. Mailing date is never an issue.

CATaxAtty (talk|edits) said:

26 July 2010
TaxWriter - excellent tip! I will file that one away for future reference.

Mscash (talk|edits) said:

26 July 2010
Regarding envelopes: If a return was received or postmarked timely it is not datestamped and the envelope is not kept. If it is late the envelope is attached to the return. If the client mailed it on time, the postmark would be there to tell.

Mscash (talk|edits) said:

26 July 2010
Regarding envelopes: If a return was received or postmarked timely it is not datestamped and the envelope is not kept. If it is late the envelope is attached to the return. If the client mailed it on time, the postmark would be there to tell.

"Shoebox" (talk|edits) said:

28 July 2010
Is this a situation where a First Time Abate might be relevant?

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