citizen_average[at]yahoo.com wrote:
- quote -

Yes, but pmt not required, only signature + like 30 days
time-lapse. However, there are exceptions permitting
reopening for serious matters, or a few other non-serious
things. If your only tax is AMT, then AMT _is_ the only
issue as a practical matter, usually. Forget about this
aspect of it, as IRS chose correspondence technique, very
likely after perusal of your entire 1040 as best they could.

- quote -

Obtain a transcript of your account for 2005 to see if it
shows they rec'd your Form 4868. By proposing a 10% penalty
(2 months), maybe they didn't process any 4868. Do you have
proof you filed one? Alternatively, the examiner who did
your From 4549 did not review the transcript, and a timely
extension is indeed posted there. File 4506-T with IRS, or
simply ask the function working you return for a transcript.

Fred F.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford wrote:

- quote -

Congress merely wrote restrictions in 1998 into law,
matching internal rules IRS used. Apparently
inconsistently. One exception is physical threat. The
Center I'm think of used a nonexistent manager's name on all
exam letters. Work 50,000 cases a year, bound to be a few
threats. Or perhaps even they stopped since 1998.

Fred F.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average[at]yahoo.com wrote:

- quote -

Yes, but pmt not required, only signature + like 30 days
time-lapse. However, there are exceptions permitting
reopening for serious matters, or a few other non-serious
things. If your only tax is AMT, then AMT _is_ the only
issue as a practical matter, usually. Forget about this
aspect of it, as IRS chose correspondence technique, very
likely after perusal of your entire 1040 as best they could.

- quote -

Obtain a transcript of your account for 2005 to see if it
shows they rec'd your Form 4868. By proposing a 10% penalty
(2 months), maybe they didn't process any 4868. Do you have
proof you filed one? Alternatively, the examiner who did
your From 4549 did not review the transcript, and a timely
extension is indeed posted there. File 4506-T with IRS, or
ask the function working you return for a transcript.

Fred F.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford wrote:

- quote -

Harlan, the proposed penalty is 6651, late-filing. The
facts hint at a refund return with -0- tax, filed late. AMT
as the only tax thus triggers a 10% (two-month) late
penalty. Orig poster needs to consider if this is the case,
and any reasonable cause for originally filing late.
Nothing to do with AMT.

Fred F.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Thanks to Taxman, TxSrv, Phoebe and Paul Thomas for detailed
answers to all my questions. Your answers have confirmed my
conjecture.

-- nothing doing about the interest; rates and compounding
mandated by Congress.
-- penalty abatement possible; does not hurt much to
request it in a short, simple letter.
-- do the AMT for 2006, even with boring tax details!

I have a two minor followup questions:

1. One of the responses seemed to imply that if I pay now,
and sign the Form 4549, it means that this tax year will be
CLOSED. Is this true? I mean I do not suspect anything else
wrong with my taxes, but knowing for sure that this year
will be closed and settled is a "good feeling" (Like I said,
never been audited before).

2. For the 2005 tax year, the tax return was due on
4/15/2006. My return was received by IRS in 6/1/2006 -- I
had filed VALID, TIMELY EXTENSION request. Note that I was
DUE A REFUND, and IRS gave me the $500 refund. Of course,
with AMT, now I owe taxes.

So, is that a timely filing of taxes or not? Is that a
failure to file taxes?

I would answer those as Yes (timely filing) and No (did not
fail to file taxes), but what do tax professionals think? I
am NOT going to argue, legalistically, that my penalty
should be waived. Just that I never did AMT, that I was told
AMT applies when one has special, ISO options (I do have
ISOs).

And, yes, even with my boring taxes of only (W-2 wage income
+ small interest + only mortgage, property taxes and state
taxes deduction), I would do the AMT for the tax year 2006.

Thank you, politicians, for the AMT
Perhaps California should leave US, and avoid all this

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

TxSrv <n3_eu[at]comcast.net> wrote:
- quote -

Last year I was underwithheld and filed late (with an
extension). I got a letter from the IRS that said basically
"You owe $80 interest already and if you pay it within a
month we won't bill you any more."

Seth

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

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

- quote -

Yep. It keeps coming up. Most congress critters agree that
it is grossly unfair, hasn't been updated in years, and
needs to be overhauled or eliminated altogether; yet, when
push comes to shove, and they realize that to do any of the
above will reduce the federal revenue by a huge amount, and
the only way to make up for that is to increase taxes (or
reduce spending) they all shrink into the wood work.

We can keep hoping - but don't hold your breath.

--
-Ernie-

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average[at]yahoo.com wrote:

- quote -

Aren't you glad at least that the AMT standard deduction
amounts were extended for one year into 2006 at the
temporary higher rates?

Your AMT was not specifically based on high CA state taxes
(actually, the property taxes in CA for long-time owners are
pretty darn low compared to some other populous states,
thanx to Prop 13). There are AMT deferral items (such as
ISO's and the other "funny" ones you mention) and AMT
exclusion items (such as your state taxes and
personal/dependent exemptions), you got hit with a lot of
exclusion items.

Since the rest of your post addresses penalties, interest,
and IRS administrivia, I'll only comment to say, I'm
beginning to see the wisdom in paying for a professional to
review AMT issues if one even thinks they will be visiting
that fabled land.

As frequent contributor Paul Thomas has commented (and
perhaps others before), the AMT may well become the default
"flat tax" if not indexed to inflation.

-Mark Bole

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

TxSrv wrote:

- quote -

What? still using fake names? I thought congress made em
stop that practice long ago.

I still use the name Sue Samples, a name used on
correspondence from Atlanta long ago as wife of Junior
Samples, my mythical and hypothetical taxpayer when I with
to project what if scenarios for a return.
(Their kids are Modine, Buster, Cleo, and Sudie - the baby)

ChEAr$, Fred,
Harlan

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average[at]yahoo.com wrote:

- quote -

Dear Mrs Average Citizen,
(grin)

IRS has offices in many cities which deal with specific areas
of tax law. I send tax returns to Austin, Philadelphia,
Atlanta, Ogden and whereever else "they" desire.
Specialization, you know.

- quote -

Mr and Mrs is not "quaint", but accepted usage; always has
been. No, they do not outsource to India, but maintain
those extra hours to benefit you, one of their best
customers.

- quote -

Yes, I think you have a very good case for getting them to
waive this first time failure to include the AMT. After
all, they are human. Well, many might even argue with this
I suppose.

- quote -

Because it's the U S congress which sets the rates, and they
are so much better than borrowing the money at your local
bank.

- quote -

No way.

- quote -

The interest will be calculated until a date maybe 25 days
beyond the final letter they send to you.

- quote -

If you want to send what you think it should be now, go ahead
and perhaps save a wee bit of interest.

- quote -

No deduction ever for penalties (which I hope you can get
waived since this is your "first time offense", but
interest is inevitable.

- quote -

It was the little old lady who did the examination who sent
you the results; not uncommon.

I'm pleased to see that you have as much understanding of
what's happened so far. So many taxpayers haven't a clue.

ChEAr$,
Harlan Lunsford, EA n LA

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average wrote.....

- quote -

First time for everyone, ;-)

- quote -

The best business practice if consolidating Wage
and investment taxpayer case processing
in a couple of centers nationwide

- quote -

Not yet, many Centers run 20 hours a day, though taxpayer
contacts are generally limited to 8 or 9 pm ~TAX PAYER~
time, since your 3 hours behind, the tax examiner should be
bright eyed & ready to talk to you even at that late hour.

- quote -

Possible first time error as basis to reasonable
cause consideration to abate the penalty.

- quote -


- quote -

State the facts as they are,
hardship (inability or ability to pay is not relevant)

- quote -

The US treasury is collecting what it's TOLD to collect.

- quote -

See above

- quote -

NO..

- quote -

NO..

- quote -

YES..

- quote -

NO..

- quote -

Possibly, depends on the magnitude of the -accrued~
interest projected forward, below a certain dollar amount
it will be cleared under tolerance, above, you might get a
check in the mail for being so prompt in your consent to
the assessment & payment of the preacccrued interest

- quote -

NO

- quote -

NO, Never

- quote -

Automation to generate the majority of the documentation for
the case. Many of these cases are generate daily, and out
going correspondence can be on the order of 500 to 1000
cases a day.

Assessment proposals need to be ~signed~ by an appropriate
graded official. Higher paid, hence the automated signature.

- quote -

Suprised they did not use a windowed envelope,
but on occasion they run out, tight budget's ya know.
So she used a standard envelope & hand addressed it.

- quote -

Welcome to the world of AMT tax creep, Congress needs to get
of their butt's and fix this, or at least be honest with the
general public about TAX INCREASES.

<< ================================================== ===== > << The above is intended for educational purposes only. > << It does NOT constitute legal OR professional advice. > << It cannot be used by any taxpayer, for the purpose of > << the purpose of avoiding penalties that may be imposed > << upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average[at]yahoo.com wrote:

- quote -

It's more efficient.

- quote -

"I have always done my taxes myself, the old pencil-paper-
calculator way. I have never been subject to AMT before,
and didn't realize I needed to fill out a Form 6251. I am
now aware that I need to use the Form 6251 to prepare a
complete and accurate return. I respectfully request that
you waive the assessed penalty based on reasonable cause."

- quote -

None of the above.

- quote -

There should be a "pay this amount by this date" bit in the
letter. The IRS has already calculated interest through
that date. If you pay significantly before or after, they
might refund / bill you.

- quote -

Neither. Interest and penalties aren't deductible. Don't
forget to use the 6251 when you do your 2006 taxes.

Phoebe

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

<citizen_average[at]yahoo.com> wrote

<<Snip the details>
- quote -

Who knows why the notices come from where they come from,
but yes, they often come from a different service center
than where you file to.

- quote -

They have flex time, what can I say. Chances are you'll
never get to talk to that person anyway.

- quote -

Yeah, your situation gives rise for the penalty to be
abated. Ask for it, multiple times if need be.

They can't do anything about the interest though.

- quote -

Failure to pay, for sure. But only for that amount of tax.

- quote -

Explain your story as you laid it out earlier, explain that
you now understand that part of the tax code and have taken
steps to get it right from now on, and ask for the penalty
(and be specific which ones you want) to be abated (and use
those words).

- quote -

Keep the letter simple. A typical format should flow like this:

Address to IRS
Your name(s), address, etc
Tax Year and Form #

Request abatement of penalty.
Layout your case (I'd explain it much like you did earlier
in the post) Request penalty abatement again, spelling out
which penalty and the dollar amount.

Offer to provide additional information to resolve the issue
in your favor.

Thank them for their time and effort in resolving things in
your favor.

Enclose check for what you believe you do owe.

- quote -

Statutory most likely.

- quote -

Congress told them they could. But, for an unsecured loan,
it's quite cheap.

FYI, don't rant about the interest rate in your abatement
request.

- quote -

No. They can, and often do, waive/abate the penalties all
the time, but they can't do diddly about the intrest rate.

- quote -

The interest is lower on people on installment plans, but
it's probably best to pay it off, as penalties also pile up.

- quote -

Interest is generally computed through a "pay by" date, that
should be on the notice.

- quote -

Nope and nope. It's considered personal interest - no
deduction. There's never been a deduction for penalties.

- quote -

Yeah, technology has never caught on at the IRS. It wasn't
all that long ago that they hand stamped the letter with a
signature stamp.

- quote -

Oh? I see they transfered her to your area..........

- quote -

And you would do differently at 10:30 pm at the office?

- quote -

Yup. Used to scare the crap out of me in the early days.
Now it's like "what the hell do they want now".

- quote -

I have a generic abatement letter that has met with some
success in the past, if you want to utilize the format.

Drop me a line and I'll shoot it to you.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The above is intended for educational purposes only. > << It does NOT constitute legal OR professional advice. > << It cannot be used by any taxpayer, for the purpose of > << the purpose of avoiding penalties that may be imposed > << upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

citizen_average[at]yahoo.com wrote:

- quote -

More efficient to centralize volume operations in a
particular tax issue area.

- quote -

If that EE actually exists, it's her preference.
Conversely, certain IRS ops are permitted to use pseudonyms
on letters. One advantage is when you call and ask for that
person, they know what kind of a letter you have (like here,
the AMT project). Another is not having the name/number in
a volume operation documented, because if you call that
person and he/she is real helpful, and you pass it along,
that person could get flooded with ordinary inquiries.

- quote -

Could be a nigh-shift project.

- quote -

I doubt it. Congress, fwg media alarm, would go ballistic.

- quote -

Your 1040 sounds as though filed 2 months late. This
penalty is not for failure to compute AMT.

- quote -

One can't assume that, as it's possible your return should
better have been selected for other issues, and it's a
mistake to have limited to AMT. Once they do so, the return
is "closed" after you sign the 4549. So, unless you have a
good argument on why filed late, I'd be careful on pursuing
relief from the penalty. Other people, like a manager, may
review your arguments, plus rest of the return, and decide
that the penalty issue and anything else be referred to your
local Area Office for audit completion.

- quote -

Interest rates are set by law, with certain Treasury rates
as a base. Compounding was recently added by Congress. No
way can IRS ignore the law as to statutory interest rates.

- quote -

Interest accrues until paid.

- quote -

They'll refund interest you pay between date paid, if before
the computation date in any notice or 4549.

- quote -

No.

- quote -

That can be a cost issue, as in no budget for the
technology to print labels/envelopes cheaper, or simply the
items inside have your SSN which will show through a
window envelope. Too expensive to fix that problem.

Fred F.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I have been filing Federal and California taxes for the last
18 years. For for the first time ever, I have received the
honor of being audited I received the letter 2194 (SC),
form 4549, etc. for tax years 2005.

Basically, I have always done my taxes myself, the old
pencil-paper- calculator way. My 2005 taxes are very boring:

-- only W-2 income (self & spouse)
-- a small amount of interest.
-- No other income, no adjustments.
-- Only personal exemptions and itemized deductions
-- itemized deductions consist SOLELY of state taxes,
property taxes, and mortgage interest
-- ABSOLUTELY nothing else.

Per IRS, I am subject to AMT just based on high California
state taxes, and property taxes. No ISO, no option income of
any kind, no "funny" income, no other deductions, no tax
shelters. Absolutely nothing else.

Anyway, IRS was kind enough to complete the form 6251 for
me, and walking through the lines, I agree with their
calculations, so I will pay. More or less happily (I mean, I
have not cursed even once since receiving the notice, and I
can afford to pay the AMT). So, my blood pressure is not
high

I have a couple of questions.

1. I file my taxes in California; it goes to Fresno, CA but
the audit letter is from Andover, MA. Just curious, why is
being handled from an office across the country?

2. Letter includes name of an IRS employee "Mrs. XYZ" (it
actually says Mrs., not Ms., how quaint!), and lists contact
hours as 4:30PM to 11PM (but does not say time zone). That
is an amazingly odd hours to contact! Is IRS outsourcing the
audit job to accountants in India, sitting in Bangalore?
That would explain the odd hours!

3. The notice also includes "Failure to file / failure to
pay - IRC 6651" penalty equal to 10% of the AMT amount (IRS
otherwise agrees 100% with my tax filing; only I never did
AMT before, and they figure I needed to do it for 2005). I
DID file taxes in time, I paid in time (through payroll
deduction, and one extra payment on Jan 15, 2006). When I
filed 2005 taxes in 2006, I received a small amount of
refund.

So, is there anyway IRS will waive the penalty? Can not
including AMT form 6251 be considered a failure to file/pay?
The 10% penalty seems steep. What "magical words" should I
write in a letter, or should I utter on phone, to plead that
the penalty be waived? Based on my family's income, I CaN
NOT say that the penalty amount of less than $500 is a
hardship on me. Still, if they waive it, that's a couple
Chinese take-outs for me & my family So, how do I plead?

4. The letter also includes INTEREST computation, at 7%
(SEVEN!) COMPOUNDED from 4/15/06 through June, 06, and at 8%
(EIGHT!) COMPOUNDED from July, 06 through now + 30 days
(yes, all the way to next month!). Boy, where is IRS earning
that high rate of interest? Even the best online savings
account have returned between 4.5% and 5% during this time,
and the yield on US treasury's 26 week bill auctions have
been only about 5.3%. How can IRS justify charging such a
high interest rate?

Anyway to get IRS to use a more reasonable interest rate,
like 5%? Can the interest be waived, or abated, fully or
partially, under any circumstances?

5. One of the forms says "Can you pay the full amount within
120 days?" My answer is YES, and YES means no need to setup
install payment plan. Fine. But will the interest continue
to acrue during this time, if I pay within the 120 days? Or
does it mean I get 120 days, interest-free, to pay?

6. If interest continues to acrue, suppose I paid right
away, within the next 3 to 5 days (mailing time from
California to Andover, MA), will IRS refund me the excess
interest from the payment date to the next month? (They have
computed interest all the way to now + 30 days).

7. Are the interest and penalty going to be be deductible on
my taxes for 2007, when I file it in 2008? Or should these
be deducted on 2006 taxes which I will file in a month,
assuming payment was due on 4/15/06?

8. Quite unsually, all the material inside is nicely laser
printed, even the signature of the "Operations Manager,
Examinations" (boss of Mrs. XYZ listed on page 1) is scanned
image, not a real signature.

However, the whole package was mailed in an envelope, which
was HAND- ADDRESSED IN INK, in real-old-lady handwriting
style, with so much ornamentation around the serifs of
letter "R" and what not. Kind of like one of those old
archived documents from 2 century ago. I suppose some bored
old lady in mailing department at IRS, or perhaps the
auditor Mrs. XYZ herself, like to doodle on outgoing audit
notices!

Anyone else receive hand-addressed letters from IRS?

Thanks a lot for your answers, and discussions. I welcome
your suggestions, tips, guidance, and what-have-you. Even
flames welcome! (but our esteemed moderator will likely snip
that!)

Average Citizen from the Golden State

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >