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Chronicles of Tax Advisors

File Taxes Late? Here's an Important Penalty Waiver

Posted by Todd Ancona Posted on Oct 19 2015

Here is a case where a new client came to us to prepare their taxes. After the initial review, we discovered that they were a partner in a partnership whose return was not properly filed in the prior year. The return was originally due by March 15 but was not filed until the following year. So we prepared and filed the partnership return and the return was 11 months late. According to law, the IRS assesses a $195 per partner per month penalty for up to 12 months maximum in case of late filing of partnership returns.

Just as we expected, the IRS sent out a notice for late filing penalty several months later. The penalty assessed was for 11 months and for the two partners. Thus, the total penalty came to $4,290. We knew this would be coming and knew exactly how to handle it. The IRS allows a First Time Penalty Abatement program, which waives penalties such as these if you meet their criteria. First, there must not be any penalties in the preceding 3 years. Second, all returns prior to and after the one that causes the penalty must have been filed. Third, taxpayer has paid or arranged to pay any taxes that may have been due. The client met all three of these criteria. Thus, we were able to call the IRS and had them administratively waive the whole penalty for our client.


Todd Ancona, EA

Licensed to practice before the Internal Revenue Service

An Enrolled Agent (EA) is a federal authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audit, collections and appeals.



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