IRS notices are going out now informing small business owners that their 2019 tax returns were filed late. And oh yeah wait until you see the penalties and interest. Here is what to do.
We recently had a prospective new client call us. He was just notified by the IRS that his 2019 1065 Partnership Income Tax Return was filed late in 2020. How could this be? Well, the filing date for such returns for 2019 tax year was March 16th, 2020. There was no Covid-19 postponements or automatic filing extensions granted for Form 1065, 1065-B,1066 or1120-S. Sadly, only individual taxpayers received the filing date postponements.
Think back to that time. The world shutdown on March 13th, 2021. Nobody could predict what was going to take place. Mistakes like these happen unfortunately.
Fixing these types of issues is not that complicated if done right.
Our new client received a notice from the IRS that he owed over $2,000 in penalties and interest for failure to file on time. And the money was due that day. A stiff penalty for an honest mistake.
What can a taxpayer do in this situation? IRS First Time Penalty Abatement. What is it?
The first-time penalty abatement (FTA) waiver is an administrative waiver that the IRS may grant to relieve taxpayers from failure-to-file, failure-to-pay and failure-to-deposit penalties if certain criteria are met.
How can you qualify?
The IRS may provide administrative relief from a penalty that would otherwise be applicable under its First Time Penalty Abatement policy.
You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service’s 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.
Since time was of the essence and we had not formally started our business relationship we advised the taxpayer to contact the IRS directly and ask for the abatement over the phone.
How did that go?
“After 2+ two hours; penalty abated! Can you believe that? Thank you for your great guidance.” And I think we have a new client.
If you are receiving this or any type of notice from the IRS (by mail is the only way the IRS will contact you) we can help.
Whatever you decide, DO NOT IGNORE THAT NOTICE. Either call the IRS directly or have your tax preparer handle it for you. And if you need a new tax preparer…. Call us.
