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Tax Mistake Help

IamThunderbolt

IamThunderbolt

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Hey All

We just received a form CP2000 from the IRS for underreporting taxes in 2021 - it has to do with a fund my wife inherited when her dad passed that has been being converted from an inherited IRA to just a general account through minimum annual disbursements, and is still managed by her dad's financial advisor - we've been really hands-off. In 2021 the fund got to the level that required a 1099-B, which I missed on my tax filings.

We're getting a disbursement to cover the taxes owed, but does anyone have any experience or tips in asking for relief for the penalty or interest accrued?
 
The IRS will generally grant penalty abatement if this is your first time being assessed a penalty. The interest runs pursuant to statute and cannot be abated except in extremely limited circumstances. However, any interest associated with the penalty would obviously be abated if you receive a penalty abatement.

Penalty Relief due to First Time Abate or Other Administrative Waiver | Internal Revenue Service

Find out about the IRS First Time Penalty Abatement policy and if you qualify for administrative relief from a penalty.
www.irs.gov www.irs.gov

Just remember that none of this is legal advice.
 
I think if you were to write a strongly worded letter indicating that they don't have the constitutional right to assess you any charges let alone a penalty on top of them and that they've only got barely a year left even having a job because once Trump returns they'll be fully defunded so they surely can spend what limited time they have left better than trying to pry it from your cold dead hands.
 
dartsndeacs said:
I think if you were to write a strongly worded letter indicating that they don't have the constitutional right to assess you any charges let alone a penalty on top of them and that they've only got barely a year left even having a job because once Trump returns they'll be fully defunded so they surely can spend what limited time they have left better than trying to pry it from your cold dead hands.
Click to expand...
I laughed
 
dartsndeacs said:
I think if you were to write a strongly worded letter indicating that they don't have the constitutional right to assess you any charges let alone a penalty on top of them and that they've only got barely a year left even having a job because once Trump returns they'll be fully defunded so they surely can spend what limited time they have left better than trying to pry it from your cold dead hands.
Click to expand...

Legit sovereign citizen parody.
 
DeaconCav06 said:
The IRS will generally grant penalty abatement if this is your first time being assessed a penalty. The interest runs pursuant to statute and cannot be abated except in extremely limited circumstances. However, any interest associated with the penalty would obviously be abated if you receive a penalty abatement.

Penalty Relief due to First Time Abate or Other Administrative Waiver | Internal Revenue Service

Find out about the IRS First Time Penalty Abatement policy and if you qualify for administrative relief from a penalty.
www.irs.gov www.irs.gov

Just remember that none of this is legal advice.
Click to expand...
and btw, according to the person I spoke with today, there is no first-time abate for penalty relief for underreporting. Just failure to pay or failure to file.
 
Well, she's used to his... uh... failures to launch so...
 
IamThunderbolt said:
and btw, according to the person I spoke with today, there is no first-time abate for penalty relief for underreporting. Just failure to pay or failure to file.
Click to expand...

Bummer dude. The only good thing is that IRS offers 0% on repayment plans I believe.
 
Need a quick bit of help from somebody knowledgeable.

My wife manages our taxes and submits our joint return (1040) each year.

It's simple enough.

... i'm also the beneficiary of a trust, that files it's own returns (typically well after April 15th). We've always had professionals handle that side of things; and, it's been super simple on my end.

Unfortunately, my trustee shook things up this year... and, attempted to handle things on their own.

My current understanding is that they (my trustee) withdrew cash from my trust account, and then errantly mailed a check to the IRS using my SSN for 2023 Estimated Taxes (that check should have been paid on the trusts' IRS ID) last July.

We were unaware of this transaction, and filed our regular personal returns in March.

I just signed up for an online IRS account, and I do see a record of them receiving the accidental check.

.... now, the trustee wants us to use our own money to cover the trusts' taxes before we've even had the chance to file an amended personal return.

... I'm wondering how difficult it will be to get that money back from the IRS.

Anything else I should know in this spot?

My inclination is to let the trust/trustee handle it, and if that means a few hundred bucks in penalties... it is what it is. Basically: I'm not inclined to personally go out of pocket until the dust has settled from our personal returns.

.... am I wrong on that?
 
vtwhat etc said:
Need a quick bit of help from somebody knowledgeable.

My wife manages our taxes and submits our joint return (1040) each year.

It's simple enough.

... i'm also the beneficiary of a trust, that files it's own returns (typically well after April 15th). We've always had professionals handle that side of things; and, it's been super simple on my end.

Unfortunately, my trustee shook things up this year... and, attempted to handle things on their own.

My current understanding is that they (my trustee) withdrew cash from my trust account, and then errantly mailed a check to the IRS using my SSN for 2023 Estimated Taxes (that check should have been paid on the trusts' IRS ID) last July.

We were unaware of this transaction, and filed our regular personal returns in March.

I just signed up for an online IRS account, and I do see a record of them receiving the accidental check.

.... now, the trustee wants us to use our own money to cover the trusts' taxes before we've even had the chance to file an amended personal return.

... I'm wondering how difficult it will be to get that money back from the IRS.

Anything else I should know in this spot?

My inclination is to let the trust/trustee handle it, and if that means a few hundred bucks in penalties... it is what it is. Basically: I'm not inclined to personally go out of pocket until the dust has settled from our personal returns.

.... am I wrong on that?
Click to expand...
You should not pay the trust's taxes out of your own funds.
 
you won't be able to get the cash back from the IRS until you file this year's return; once you get the refund you can give it back to the trust. I wouldn't front it if you don't have to. The trustee should just show a receivable from you and pay trust taxes out of its available cash.
 
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