Dave Rudisill wrote:

- quote -

Yes, very possibly a very negative consequence, and that is
the failure to file penalty, if you have not paid at least
90% of your tax by April 17th. This is assessed regardless
of whether you file an extension.

And BTW, if you have all the facts and figures for your
return, you do not need an extension. Just file the
return, pay what you can, and include with the return form
9325...94...xxxx something like that. I call it a "plea for
mercy", but IRS calls it an installment agreement request."

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

Yes

- quote -

Yes

- quote -

Each letter includes a return envelope to the
lock-box/processing center. Tare off the posting coupon
printed at the bottom/top of the letter. As Lanny mentions,
send what you can with each letter!

When you receive LTR-1058, that will be the end of the line
for notices, the next action will be a LEVY on you bank
account!

If a Revenue officer is assigned the case return one of the
two copies of the letter-3220 or letter-1058 sent or hand
delivered to you, Yes there are bush pilot Revenue Officers
:-)

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Dave Rudisill <denali[at]alaska.net> wrote:

- quote -

You will receive 3 or 4 notices from IRS concerning the
unpaid taxes; each will sound more threatening than the
previous one. Nevertheless, until you receive the certified
mail "Notice of Intent to Levy" you are dealing with the
computer. I recommend making at least a token payment with
each notice, in case something happens to delay the final
payoff.

When you make payment, enclose your check with the stub
provded on the most recent notice. That is all the
paperwork you need.

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

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Dave Rudisill <denali[at]alaska.net> wrote:

- quote -

If this were me, it would depend on just how much this 10%
early withdrawal penalty was. If it is for a small value CD
(or other investment) earning a low enough interest rate, I
would probably just cash it in and eat the penalty, but if
it was for, say, a $150,000 CD earning 8.5% and I had to
cash in the entire CD to get the money I needed, then I
would arrange for a short term personal loan from my credit
union which would probably be cheaper than the penalties
incurred from not paying my taxes on time.

Even if a short term loan cost a bit more than the possible
tax penalties I would have peace of mind and not having the
burden of $15,000 of unpaid taxes hanging over me.

With an investment to back up and cover the loan, you should
not have any trouble obtaining a short term personal loan at
reasonable rates to pay your taxes, particularly if you
belong to a credit union which usually has better terms and
rates.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

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L K Williams <lanny[at]loxinfo.co.th> wrote:
- quote -

filing fee, correct?

I don't file for an extension, I simply don't include a
check with my return?

When I pay the $15,000 in September, what form(s) do I need
to use?

Thanks.

--
Dave

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"Dave Rudisill" <denali[at]alaska.net> wrote:

- quote -

If the Federal Tax Lien is filed, it will show in your
credit history of a long 7 years even if paid off quickly!

PAY NOW!

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"Dave Rudisill" <denali[at]alaska.net> wrote:

- quote -

This think is the WORST & Most common misconception going!
Here is why!

The 4868 is an extension of time to FILE the return, not pay
the tax. For the 4868 to be valid you should pay the
15,000.00 by 4/17. Since you can not afford to pay now at
the risk of premature penalty $1500 in liquidating an
investment of 10% your facing the following penalties &
interest!

==============================
~$3375.00 FTF (Failure to file on time penalty) 4.5% for 5 months of 15k
(given the amount due your will be charged FTF!)

~$ 450.00 FTP (Failure to pay the tax due on 4/17, accrues [at]0.005/month)
(final demand letter increase rate to 1% a month)
(until reaching a maximum of 25%)

~$ 380.00 INT (Interest is currently accruing [at]7%/annual compounded daily)
(on the TAX -AND- FTF penalty from 4/17 to 9/1)

~$ 4205.00 TOTAL
=============================

If you file on 4/17 with form 9465 proposing to pay
installments of $3000 starting with check attach on 4/17,
and make subsequent payments of $3000 on 5/15, 6/15, 7/15 &
8/15 you will pay approximately.

$ 0000.00 FTF
$ 150.00 FTP
$ 265.00 INT
$ 415.00 TOTAL finance costs
=============================

The clincher, you must maintain your estimated tax deposit
obligations for 2006 due on 4/17, 6/15 & 9/15...............
If you do not, you run the risk of accruing ESTIMATE TAX
DEPOSIT penalty which will be assessed Spring of 2007 when
you file.
=============================

If the CD your invested in is paying trivial rates I see no
reason to delay liquidation of the investment now, OTOH, If
your earning a very high rate, consider your options, but DO
NOT file late!

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Dave,

That sounds about right on the interest and penalty amounts.

"Is there any negative consequence to doing this, other than
the interest and penalty?"

No.

"Does it show up on credit reports?"

Generally no, unless it gets to the point where the IRS has
to file a lien on your property or other assets if you fail
to pay the balance due.

Rudy
www.LizcanoTaxServicesLLC.com

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"Dave Rudisill" <denali[at]alaska.net> wrote:

- quote -

No. When you extend your return, you're getting an
extension of time to file the return, not pay the tax. If
you don't pay at least 90% of your liabilty by the oringinal
due date 4/17/06 this year, you'll have a "bad" extension.
You'll pay 5% per month up to 25% plus the interest you
mention. It will be very expensive for you not to pay your
liability due w/ your extension.

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Dave Rudisill <denali[at]alaska.net> wrote:

- quote -

In theory, IRS could charge you for late filing,
invalidating your extension because you did not pay the
minimum tax by 4/15. Why not file the return without making
payment. That way, you avoid any possibility of late filing
penalties (late filing is 5% per month, late payment is only
1/2% per month.) The way the system works, you will receive
a series of notices from IRS but these are all computer
generated (no human is involved) and give you 4 or 5 months
before a live revenue officer gets involved.

I have always counseled my clients to file their return,
even if they could not pay immediately. I also advise them
to make at least a token payment with each notice and, if
possible, to pay the balance with the final notice. Doing
so shows an intention of payment, rather than avoidance, and
does not affect ones credit standing or future relations
with IRS
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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We will owe the IRS around $15,000 this year, in addition to
our quarterly estimated payments. I am considering filing
for an extension and waiting until Sept 1, 2006 to pay the
bill, since I would avoid a 10% early withdrawal penalty on
the money.

If I understand the rules, I will pay .5% per month penalty,
plus .583% interest (7% divided by 12) on the $15,000 from
April 15 until September 1, totalling around $800, ignoring
compounding.

Is that correct?

Is there any negative consequence to doing this, other than
the interest and penalty? Does it show up on credit reports?

Thanks.

--
Dave

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