Monday, February 7, 2022

MORE PROOF

More proof that the IRS is totally FU-ed.

Taxpayers had an overpayment of $782 on their 2020 Form 1040-SR.  They requested, on Line 36, that $375 be applied to 2021 estimated taxes as the first quarter payment.  The net refund requested on Line 35e was $407.  The return was filed in March 2021.

The taxpayers received a refund check from the IRS in July for $787.87 - $782.00 plus $5,87 interest.  They also received CP30A notice from “Sam” stating that “We’ve reduced your penalty for failing to pay estimated taxes” as an explanation why the refund was $782 and not $407.

What penalty for failing to pay estimated taxes?  I NEVER calculate a penalty for underpayment of estimated taxes on ANY federal or state tax return I prepare – and I NEVER include a Form 2210 with the return.  It is my opinion that if the IRS wants to assess a penalty let them do so – and I will deal with it only if they do.  I did not make any entry on Line 38 of the 2020 Form 1040-SR.

This CP30A was informational only and did not request or require any action by the taxpayer.  However, it has become crystal clear that every single notice issued by the IRS nowadays is erroneous.  While you should not ignore an IRS notice (except the one telling you your 2020 return was not received and you should file or refile it) – you should never assume that it is correct or that it contains any actual facts.  Or that you should do as it instructs. 

I continue to wonder if the IRS will ever fully recover from its 2020 shutdown.

TTFN









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