Lucho Posted December 2, 2012 Report Share Posted December 2, 2012 What would be the best way to tell IRS why my client is filing late? By Oct 15 he was in the hospital and after the doctor let him go home he needed some extra time to rest. Should I E-file the return and wait until IRS send the bill including the late filing penalty? or should the return be mailed and attach the documentation explaining the reason for being late. This is my first time I have a client with tax liability that is filing late. Thank you for any help I can get. Lucho Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted December 2, 2012 Report Share Posted December 2, 2012 The IRS neither cares, nor is under any sort of requirement to even consider it. Too late to e-file, so it must be mailed. The taxpayer had 10+ months to file. If he chose to procrastinate and then ended up sick, those are the consequenses of his choice. Send the explanation with the return if you wish. I think all that will happen at the IRS is a good laugh. I have yet to get a late filing or late payment penalty abated when the taxpayer files after Oct. 15. Let us know how that works... Quote Link to comment Share on other sites More sharing options...
JohnH Posted December 2, 2012 Report Share Posted December 2, 2012 I agree with Jack. You must have a reason that will make them cry. But it won't hurt to try. When they ignore the letter you send with the return, you can give it another shot by sending a second letter after the notice arrives. You might even try calling them with the client conferenced in on the call after the notice arrives. I've had some situations where we got some consideration on the phone that we couldn't get by correspondence. It all depends on the luck of the draw and how persuasive you are. Quote Link to comment Share on other sites More sharing options...
jainen Posted December 2, 2012 Report Share Posted December 2, 2012 >>By Oct 15 he was in the hospital and after the doctor let him go home he needed some extra time to rest.<< First of all, there should be little penalty anyway since it's based on balance due. Presumably a good faith estimate was paid with the extension request, so it may not even be worth the time and effort to request abatement. Late Filing Penalty will not be imposed if the taxpayer can show that the failure was due to reasonable cause rather than to willful neglect. That is generally hard to prove, but medical incapacity MIGHT qualify if he can specifically document his condition and the time frame. The argument is much stronger when the taxpayer can claim an excellent history of compliance (including a good faith estimate with this year's extension), and/or describe SPECIFIC changes in circumstances to ensure the failure will not happen again. Taxpayer should sign the request, not you. Quickfinder [stop screwing around and just get it] says, "Request abatement by submitting a written statement to the director of the service center where the return was filed. Include all facts showing reasonable cause for the failure and a signed declaration stating the following: [Reg 301.6651-1(c )] "Under penalties of perjury, I declare that I have examined this statement and accompanying information and, to the best of my knowledge and belief, they are true, correct and complete." 1 Quote Link to comment Share on other sites More sharing options...
Lucho Posted December 2, 2012 Author Report Share Posted December 2, 2012 Thank to all of you for reading my post. I will keep you informed of the outcome. Lucho Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted December 2, 2012 Report Share Posted December 2, 2012 >>By Oct 15 he was in the hospital and after the doctor let him go home he needed some extra time to rest.<< That is generally hard to prove, but medical incapacity MIGHT qualify if he can specifically document his condition and the time frame... If he was "medically incapacitated" would mean that he could not make any financial transactions on his own. This would include paying monthly bills, going to the grocery, etc. Call me skeptical.... Quote Link to comment Share on other sites More sharing options...
jainen Posted December 2, 2012 Report Share Posted December 2, 2012 >>"medically incapacitated" would mean that he could not make any financial transactions on his own.<< No, it's not as stark as that. In fact, reasonable cause could even include the serious illness of a family member other than the taxpayer. Filing a return is sometimes much more complicated than simply paying bills. It almost always depends on someone else providing information first, and generally calls for a healthy mind and spirit. What the regs say is "If the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time, then the delay is due to a reasonable cause." There is quite a lot of tolerance in the phrase, "ordinary business care and prudence." Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted December 3, 2012 Report Share Posted December 3, 2012 Yeah, Jack, what Jainen said! Don't be so hard-line, leave that to the IRS. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted December 3, 2012 Report Share Posted December 3, 2012 Yeah, Jack, what Jainen said! Don't be so hard-line, leave that to the IRS. I will wait for the report about the outcome... Quote Link to comment Share on other sites More sharing options...
jainen Posted December 3, 2012 Report Share Posted December 3, 2012 >>By Oct 15 he was in the hospital<< October 15 is NOT the filing deadline; it is the end of the extension period. When I said "time frame" I meant that if you are explaining how "the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time," you need to start with April 15. Because if he just put it off until the last minute, that's willful neglect even though he didn't expect to get sick. That's why the penalty is calculated from April 15, and I suspect it's why the IRS summarily dismisses most abatement requests. In that case, John's suggestion to try a sob story on the phone is probably the best approach. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted December 3, 2012 Report Share Posted December 3, 2012 >>By Oct 15 he was in the hospital<< October 15 is NOT the filing deadline; it is the end of the extension period. When I said "time frame" I meant that if you are explaining how "the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time," you need to start with April 15. Because if he just put it off until the last minute, that's willful neglect even though he didn't expect to get sick. That's why the penalty is calculated from April 15, and I suspect it's why the IRS summarily dismisses most abatement requests. In that case, John's suggestion to try a sob story on the phone is probably the best approach. YES What jainen said!!! Procrastination is not an acceptable excuse. Quote Link to comment Share on other sites More sharing options...
JohnH Posted December 4, 2012 Report Share Posted December 4, 2012 I can make a pretty good argument for procrastination being an acceptable excuse . Will post it later. 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted December 4, 2012 Report Share Posted December 4, 2012 If it was ONLY procrastination, then no abatement. However, we all know there can be legitimate reasons sometimes for procrastination. I will not just ASSUME that there is no reasonable explanation possible. I agree it's not going to be easy, but not that it is impossible. We don't know enough details to determine that. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted December 4, 2012 Report Share Posted December 4, 2012 I WAS still receiving K-1's for some of my individuals in october, yes they were late but thats not my clients fault. Quote Link to comment Share on other sites More sharing options...
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