TaxmanHog wrote:
- quote -

Hmmm, added information.

originally he included his W2 income in the schedule c
worksheet as I mentioned above. I didn't know that of
course, so his W2 was processed normally on line 7. Which
means double income reported Originally.

So the 1040x subtracts the W2 income from sch c, leaving
only maybe 6000$ gross, and thus generating large refund on
the 30,000$ of W2 income plus the SE tax originally paid.

So I can't blame them if they do scrutinize it carefully.
Keeping my fingers crossed.

ChEAr$,
Harlan

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- quote -

Just under the wire for statute!?

Being as it is this close, it will be scrutinized, full IRP
doc review (again)!

The clients error might have been reviewed the automated
under reporter system.

The TE may have screened & closed this issue a couple of
years ago, closing it as missing wage entry found as exact
differential match on Schedule C gross receipts.

The reason it was closed is that correction of the ~apparent
~ error would have resulted in the refund you computed.

Just another reason some folks should not attempt to do even
a simple Schedule C

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Stuart A. Bronstein wrote:
- quote -

So that might help to mitigate the interest, but they would
still be liable for having failed to file a return.

Sunday morning ChEAr$,
Harlan Lunsford, EA n LA

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Today I amended the federal, Georgia and Alabama returns for
a client. Took me all of 25 minutes and charged him 75$ for
my time.

But why did I have to amend? Because, on his business
income /expense worksheet for 2002, he included in gross
income, all of his business income plus his W2 income. So
this amendment reports about 30,000$ less schedule c income,
negates the original schedule se and also affects the
medical deduction on schedule a.

What I'm wondering now, will IRS just process it routinely,
or might they notice the requested refund of 7,500$ and say
"Whoa now! wait a MINUTE?"

time will tell.

Sure, I have had plenty of amendments over the years, but
none exactly like this one.

ChEAr$,
Harlan Lunsford, EA n LA

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Michael, your statements are ALL woefully incorrect. It is
under the IRS tolerance amount and the chance the IRS would
do anything is ZERO. Period. You've been told so by every
single tax professional here representing hundreds of years
of experience with the IRS and representing taxpayers. But
that isn't what you wanted to hear. You wanted to make a
statement and you did so. Congrats. I hope you feel better.

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- quote -

Correct

- quote -

Actually 10 or 21 days (Depending on the magnitude of tax
change) after notice of assessment of the newly discovered
tax deficiency.

Example,
Original return filed late with tax due paid late but before
an audit.

Couple of years go by, the audit is done, it is agreed &
default assessment that more tax is due, you have 10/21 days
to pay the new amount of taxes due, if not paid then a new
course of FTP begins to accrue until the liability is paid
in full.

Also note the FTF penalty is also adjusted & assessed
immediately base on the new additional taxes due!

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"TaxmanHog" <taxmanhog[at]comcast.net> wrote:

- quote -

Does this mean there is no FTP penalty for taxes due from
errors in filing until after the IRS discovers and notifies
concerning said errors? In other words if one "forgets" to
include, for example, a large capital gain from an
overlooked sale the penalty for extra tax payment does not
apply until 21 days after the IRS sends out a letter asking
for a corrected return? That could be a couple of years in
most cases.

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- quote -

IRM 20.1.2.1.2 (07-31-2001)
General Information
1.. General applications:

1.. IRC section 6651(a)(1): The FTF penalty applies on
the amount due from the return due date (or extended due
date) until paid or until the 25% maximum penalty is
applied. The FTF penalty rate is 5% a month. (See exception
(2)a below.)

2.. IRC section 6651(a)(2): The FTP penalty for failure
to pay amounts shown on the return as filed, applies on the
amount due from the return due date to the date paid at
one-half of one percent (.005), not to exceed 25%.

3.. IRC section 6651(a)(3): The penalty for failure to
pay amounts not shown on the return (e.g., audit
deficiencies or other subsequent adjustments) applies on the
amount due beginning after 21 calendar days from the notice
and demand for payment (23C date) to the date paid at
one-half of one percent (.005), not to exceed 25%. (Note: if
the amount due equals or exceeds $100,000, the FTP penalty
under IRC section 6651(a)(3) starts 10 business days from
the 23C date.)

2.. Coordination between FTF and FTP penalties:

1.. When the FTF penalty under IRC section 6651(a)(1)
and the FTP penalty for failure to pay tax shown on the
return under IRC section 6651(a)(2)) both apply for the same
months, the FTF penalty under IRC section6651(a)(1) is
reduced by the amount of the FTP penalty under IRC section
6651(a)(2).

2.. When the FTF penalty and the FTP penalty for failure
to pay tax not showing on the return under IRC section
6652(a)(3) both apply for the same months, FTF is assessed
at 5% per month not to exceed 25%. FTP applies at 1/2% per
month not to exceed 25%. (Note: FTP under IRC section
6651(a)(3) applies to subsequent assessments, e.g., audit
deficiencies.) There is no offset/reduction between FTF and
FTP under IRC section 6651(a)(3).

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- quote -

Of the unpaid tax. If all the tax is paid even though the
correct return is submitted anonymously, perhaps, no tax is
due so the penalty would be times zero.

Stu

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- quote -

No, it's the other way around --
Failure to file = 5% per month
Failure to pay = 1/2% per month

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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wrote:

- quote -

I agree, they get him for failure to file. But that's much
less of a penalty than failure to pay, right?

Seth

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Stuart A. Bronstein <spamtrap[at]sbcglobal.net> wrote:
- quote -

They proved he had income (by showing he spent money). In
my example, they prove he spent money, he proves he paid
Income Tax, he walks.

Seth

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Seth Breidbart wrote:

(snipped)

But Seth, what happens when IRS indicts the guy for failure
to file a return? They did this to Capone I think.

ChEAr$,
Harlan Lunsford, EA n LA
who had a distant cousin who worked for big Al.

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sethb[at]panix.com (Seth Breidbart) wrote:

- quote -

Well, they couldn't get Al Capone for the underlying crimes,
but they got him for tax evasion.

Stu

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- quote -

Not filing isn't nearly as bad as not paying, is it? It
certainly can't be as bad as both together.

- quote -

It's clear he didn't file; what more proof is needed?

- quote -

Huh? If there's evidence of the illegal activity sufficient
to prove income, the government already has that. If not,
it didn't prove he owes taxes, so he doesn't reveal that he
paid them.

- quote -

So?

- quote -

Nope; the attorney would be under confidentiality rules.

- quote -

It's more evasion to pay most of the tax due than to pay
none of it? Why?

Seth

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- quote -

What makes it "voluntary"? It's the amount of tax the
person owes, and he's paying it.

- quote -

And he replies "I paid it when it was due, here's the
receipt you sent my attorney."

Seth

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Seth Breidbart wrote:

- quote -

That charge will a crime, and thus a terrible idea. One of
the criminal statues in Title 26 applies to even refund
returns, for mere fact of nonfiling. Obviously this is not
considered in usual t/p's who skip their refunds, but it
works here.

These letters and statements will hand IRS all the needed
elements to prove the crime. It gets worse. If some evidence
on the illegal activity is found, then the jury may get to
hear it, guaranteeing a vote of conviction for just not
filing. Gov't in effect gets a conviction for illegal
activity it can't prove.

It can get worse. The attorney would have no way to verify
the client's representation of anything as to taxable income
and tax. The t/p would be an idiot to give the guy details,
as criminals don't trust anybody. If IRS reconstructs it,
and the liability is greater, it becomes a 7201 evasion, for
much longer sentence, and one very important element of that
crime was handed over to IRS. To get out of that, t/p can
cooperate and turn over everything, if it will show the tax
difference was no more than negligence, and beg for a plea.
But if that gives them evidence of the illegal activity....

Fred F.

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- quote -

That seems to be what Stu was saying above, but I strongly
disagree. Any "voluntary contributions", merely alluding
to it's actually being tax are nothing but contributions to
the U S Treasury.

While I have no first hand knowledge of this situation, I
should think the IRS would say, when they get a return or
make a return, "this is what you owe us here and now
including interest and penalties."

ChEAr$,
Harlan Lunsford, EA n LA

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wrote:

- quote -

Really?

What if, say, somebody told his attorney that he'd earned a
bunch of money illegally last year, and wanted to pay his
taxes, but not file because he didn't trust confidentiality
of his return? So he hands the attorney a bunch of cash,
and the attorney sends it (by check) to the IRS with a
letter saying "My client said this is the amount he owes."

If the guy gets caught later, he can be charged for not
filing, but he gets a pass on not paying because he paid
(once he proves that he's the one the attorney sent the
money for), right?

Seth

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"hlunsford[at]bellsouth.net" <hlunsford[at]bellsouth.net> wrote:
- quote -

No. Actually I remember from years ago stories about people
who didn't want to make disclosures on income tax forms, so
they had their lawyers send in tax payments without
disclosing their identities. The idea was that, if ever
audited they could prove they paid the tax.

Stu

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