Tax Prep by Deb Posted March 24, 2009 Report Share Posted March 24, 2009 I have a new client who did not file his 2007 taxes. When I prepared his 2008 he had a refund of over 900 for which he received, even though 07 taxes had not been filed. When I received his paperwork for his 2007 taxes I filed the return with a balance due of 132.00. He sent his payment in with his return. Today he received a letter that states he owes an additional 118.97. We realized that there was going to be penalties and interest but this seems very excessive. What do you all think? Deb! Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 24, 2009 Report Share Posted March 24, 2009 Did it break down the amount into penalty $xxx and interest $xxx? Did you do a quick and dirty calculation to check on the amounts? Do you have any reason to support asking for an abatement of the penalties? And no, it does not seem likely that an underpayment of $132 would have generated P&I of $119 in just a year. Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted March 24, 2009 Author Report Share Posted March 24, 2009 Did it break down the amount into penalty $xxx and interest $xxx? Did you do a quick and dirty calculation to check on the amounts? Do you have any reason to support asking for an abatement of the penalties? And no, it does not seem likely that an underpayment of $132 would have generated P&I of $119 in just a year. The client is going to bring the notice in tomarrow. My first thought was that they had not credited him the payment, but he said it looks like they did and that the rest was interest and penalty. I will know more tomarrow when I see the notice. I did a quick calc of the 5% penalty for not filing on time, but that amounts to less than $20 unless it's charged per month. I know there are penalties for not paying and these accrue per month but they should not be that high. His current bill is almost the same as his original bill. I've had clients who in the past filed and payed late, but never was their penalties this high in proportion to the amount owed. It just doesn't seem right to me. Deb! Quote Link to comment Share on other sites More sharing options...
grandmabee Posted March 24, 2009 Report Share Posted March 24, 2009 The client is going to bring the notice in tomarrow. My first thought was that they had not credited him the payment, but he said it looks like they did and that the rest was interest and penalty. I will know more tomarrow when I see the notice. I did a quick calc of the 5% penalty for not filing on time, but that amounts to less than $20 unless it's charged per month. I know there are penalties for not paying and these accrue per month but they should not be that high. His current bill is almost the same as his original bill. I've had clients who in the past filed and payed late, but never was their penalties this high in proportion to the amount owed. It just doesn't seem right to me. Deb! no filing penalty is 5% per month max at 25% but if over 60 day minium penalty is 100 or 100% of tax in your case it would be 100. plus late paying penalty and interest. Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted March 24, 2009 Author Report Share Posted March 24, 2009 no filing penalty is 5% per month max at 25% but if over 60 day minium penalty is 100 or 100% of tax in your case it would be 100. plus late paying penalty and interest. Ouch! Then that explains the amount he is being charged. It just seems very out of proportion to others I have seen. But then again, after I see the paper work I'll be more informed. Thanks for your reply Deb! Quote Link to comment Share on other sites More sharing options...
cpabsd Posted March 24, 2009 Report Share Posted March 24, 2009 I don't want to get political, however, the penalties and interest your client is being hit with seem much larger than some of the presidential appointees. It may be worth at least asking for some reduction. Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted March 24, 2009 Author Report Share Posted March 24, 2009 I don't want to get political, however, the penalties and interest your client is being hit with seem much larger than some of the presidential appointees. It may be worth at least asking for some reduction. I do plan on trying, as he was the one that filed on his own. He was never sent a notice, nor was there a flag on his account when we filed the 2008 taxes. If he had known that he would have been hit this hard, he probably wouldn't have filed until forced to. I just know that I have had other clients who owed for more years and owed far more than he did and received less of a penalty based on the amount owed. It just seems out of proportion to me. Deb! Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 25, 2009 Report Share Posted March 25, 2009 <snip> I just know that I have had other clients who owed for more years and owed far more than he did and received less of a penalty based on the amount owed. It just seems out of proportion to me. Deb! to answer your original question -- whether or not it is right, it may well be correct. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.