You are the father

[ILLMAS]

Maybe you might know someone that found out they are the father a couple of years later, well if you compare it to my clients situation it's almost the same thing. Well today my client received an IRS notice for tax year 2004, 2007 & 2008 for late filing a 1065, that's 8, 5 and 4 years later, I am so surprised that I don't know if I should call the IRS or write a letter.

[Guest Taxed]

Do you have a copy of the letter? is it from Ogden, UT?

One of my clients got one too for a 1065from 2007, and we called the # on the letter. Then we sent them a copy that was already paper filed back in 2008. We also showed them that the K1s were reported on 1040 for 2007. Problem solved.

[kcjenkins]

Marco, let me see if I understand the case. Your client was in a partnership, and, if I'm getting your comparison, he had no idea that 1065's were not filed?

If that's what you mean, then the first thing to do is look at everything he does have from the partnership. I'm guessing it's just K-1s. But that alone might be enough to beat some penalties. It is actually possible that the returns were filed. IRS does make mistakes occasionally. Main thing is how large a percentage he owned, the higher it is, the less chance, in my experience, that they will abate any penalty.

[Guest Taxed]

If MAS prepared and filed the returns in question then it should be relatively easy to document that. In my situation i had prepared the return, supplied the large envelope and client mailed it certified BUT did not save the receipt. But we were lucky because the 1040 transcripts showed the K1 income reported correctly.

For some reason Ogden service center had some issue retrieving paper filed returns at one time.

[MsTabbyKats]

For the record....more than one person at IRS has told me mailing something certified is meaningless if they don't receive the return. I was told it's actually worse, because it disrupts the "posting sequence".

[ILLMAS]

I guess it's shocking for both the client and myself that they just received the notice yesterday after all these years. I did not prepare 2004 and 2007, I did prepare 2008 and after looking at my notes, the prior preparer provided me with 2008 information after 10/01/09 so I know it was late. I am going to take a wild guess and say the 2004 and 2007 were also filed late. I had called the IRS before on behalf of this tax payer and they had said no penalty abatement because he is always late (IRS records) for another partnership before. According to the client they never received a notice before, anyway I am going to call the IRS on their behalf and see what happens.

[Jack from Ohio]

"I never received any notices" is probably not accurate, and will not hold any weight with the IRS since he has a proven record of late filing.

[Lion EA]

I've had good luck with the following for late filed partnerships and partnerships that didn't file extensions and even an S-corp once:

ABC, LLC, 06-1111111, filed Form 7004 Application for Automatic Extension of Time To File on 3 April 2009. Therefore, its Form 1065 was timely filed 15 September 2009.

Even if you did not record its Extension prior to the original due date, ABC qualifies for an exception to the penalty you charged under IRC Section 6698(a)(1), because all two (2) partners, X, 222-22-2222, and Y, 333-33-3333, reported all their shares of income and deductions timely on their joint 2008 income tax return Form 1040. Therefore, the partnership meets the criteria specified in Rev. Proc. 84-35, which says in part: “A domestic partnership composed of 10 or fewer partners and coming within the exception outlined in section 6231(a)(1)(B ) of the Code will be considered to have met the reasonable cause test and will not be subject to the penalty imposed by section 6698 for the failure to file a complete or timely partnership return, provided that the partnership, or any of the partners, establishes, if so required by the Internal Revenue Service, that all partners have fully reported their shares of the income, deductions, and credits of the partnership on their timely filed income tax returns.”

We trust that you will remove the penalty due to reasonable cause for small companies.

[Guest Taxed]

For the record....more than one person at IRS has told me mailing something certified is meaningless if they don't receive the return. I was told it's actually worse, because it disrupts the "posting sequence".

It may be meaningless that you have to refile if they never received it. But it sure gets rid of interest and penalties. I have used that many times, providing a copy of the receipt.

[Guest Taxed]

... I had called the IRS before on behalf of this tax payer and they had said no penalty abatement because he is always late (IRS records) for another partnership before. According to the client they never received a notice before, anyway I am going to call the IRS on their behalf and see what happens.

If I was preparing their returns and found out that they are habitually late, I would NOT stick my neck out for the IRS to chop it.

Few years back I had a client who claimed his daughter telling me that it was in the divorce decree. I did not ask to see the decree but come to find out that at a "weaker moment" he has signed a 8332 to his ex, and when i questioned he said he had revoked it?? Fortunately the ex wife is a very reasonable woman and she informed me through her preparer that he is in possession of a valid 8332. Needless to say I told my client either come clean and take the dependent off the return, do a 1040X or find another tax preparer. He is still my client and has not pulled a stunt like that again so far.

[Richcpaman]

MAS:

I would go with what Lion posted. *IF* you cleint reported thier share of income/expenses of the partnership.

Rich

[ILLMAS]

MAS:

I would go with what Lion posted. *IF* you cleint reported thier share of income/expenses of the partnership.

Rich

Yes, I reached out to Rita this morning and she provided me with the template, I will be preparing the letter this afternoon.

MAS

[Guest Taxed]

I was not aware of IRC Section 6698(a)(1) exception but the example I gave fit the situation perfectly. That is why once we proved that K1 income was included by all partners in their 1040, IRS did not bother anymore. It makes sense now.

[michaelmars]

although it doesn't apply to s corps I have used the same verbiage and had penalties abated.

[bertrans]

For the record....more than one person at IRS has told me mailing something certified is meaningless if they don't receive the return. I was told it's actually worse, because it disrupts the "posting sequence".

I agree wholly with the advice you were given: think about it. If uou send 'x' by certified mail and you get a signed receipt that 'x' was received, how do you go about proving what 'x' is??? And the cetrtified mail process does complicate the Service's mail procedure enourmously.