Leaderboard

Client: "Anything you can do about these penalties?" You: "Sure, I can show you how they're calculated."

Tom...I think your post meets all the requirements of a qualifying relative, except for the support portion. Assuming the stay in the care facility is temporary, then they probably do qualify as a dependent. If the stay in the facility is long term and is being paid for by SSI and Medicare, it does not sound as if though they meet the support test. In that case, they probably do not qualify. Just my thinking.

The relief will apply to Forms in the 1040, 1120 and 1099 series. "The relief applies to the failure to file penalty. The penalty is typically assessed at a rate of 5% per month and up to 25% of the unpaid tax when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted today on IRS.gov. To qualify for this relief, any eligible income tax return must be filed on or before Sept. 30, 2022." "Relief is automatic; most of $1.2 billion in refunds delivered to eligible taxpayers by next month Penalty relief is automatic. This means that eligible taxpayers need not apply for it. If already assessed, penalties will be abated. If already paid, the taxpayer will receive a credit or refund. As a result, nearly 1.6 million taxpayers who already paid the penalty are receiving refunds totaling more than $1.2 billion. Most eligible taxpayers will receive their refunds by the end of September." https://www.irs.gov/pub/irs-drop/n-22-36.pdf I must say that this is unexpected!

@Terry D EA You are trying to change the circumstances to enable the client to continue behaviors that they should not be continuing. It is the behavior of the client that needs to change, and their unwillingness to do so results in penalties and interest. It is the behavior that is causing the issue, not the circumstances. Good choice to leave it alone. It would have made a more complicated situation that you would be blamed for when their behavior continued to cause penalties and interest. Some clients are just the way they are and our best efforts to help save them from themselves are futile. Tom Longview, TX

I'm puzzled a bit by the lack of discussion of this distinction in other accounting & tax publications. I've read several articles by law firms purporting to "explain in detail" how this all works, but every single one of them leaves the reader thinking Sep 30 is a "drop dead" date. (Perhaps they are trying to create a sense of urgency, which also might translate into premium billing for the work?) Yet, at the same time the Journal of Accountancy is certainly a reliable source so I have no reason to doubt their analysis. The only thing I can surmise is how averse many people are to "penalties" in the generic sense. For example, a FTP penalty is peanuts when compared to a FTF penalty, but I sometimes question whether a particular commentator understands the difference since they seem to treat all penalties as the same. Whatever the case, if a taxpayer owes $10K and can't make the Sep 30 deadline but could be ready by Oct 31, they pay a $500 FTF penalty vs $2,500. And so on, with the penalty increasing by $500 with each succeeding month until the 5th month. (I'm not taking into account the interest and the relatively tiny FTP penalty, since they remain the same under any scenario of filing and payment) As you said, Lion, this is huge. Especially at this late date.

That is huge, John. Thank you.

Years ago I had a S Corp with a September 30th year end, which requires you to make a tax payment so that your client can't use the year end change to defer payment of their taxes. The Tax Advisor has a very good explanation: https://www.thetaxadviser.com/issues/2009/apr/scorporationtaxyearrules.html

>>>>>>Tell them that they either need to pay you to keep the books up to date, or hire a third-party bookkeeper that you can train and work with. <<<<<< I agree totally and have already been down this road. They are using QB Enterprise, which I would like to see them get rid of but, that's not happening. I'm taking the "I told you so" attitude. Just trying to see if there is any way to help them that is not a crutch.

I still think the best version of Quicken ever was Quicken '98. I can still kick myself that I ever upgraded from that one.