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bad advice, IRS penalty

andviv

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My brother got a very bad advice when filing his taxes for 06 and when he told me about it I mentioned that it didn't make sense to me. I told him to go talk to an expert and get his opinion.

Well, the new advisor told him that the original filing was wrong and that he owes both federal and state taxes (not that much, something like $500 to the federal and $150 for state) so this guy told him to send the 1040x with the corrected filing and the mentioned amounts owed, and that IRS will bill him later for the penalties, so that was paid separately.

This 'pay what you owe now, the penalty when they bill you' sounded kind of weird. Is that how IRS does this? What about the State's treasury or tax department? (NY in this case)
 

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JScott

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While your brother could certainly pay the penalty at the same time he pays the additional amount owed, it would likely be difficult for him to calculate the amount of the penalty, and therefore pay the correct amount.

It's pretty standard to just wait for the IRS to assess the penalty amount, bill you, and then pay that amount later when you get the bill.
 

Russ H

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andviv-

Diane is obviously the one with the most experience here, but yeah, that's what we do all the time: If we find a mistake, we file an amended return, send them the $$, and wait for a penalties/late fee bill.

As JScott mentions, it's almost impossible to accurately determine the late fees/penalties--AND-- the earlier you pay, the less all of this is!

-Russ H.
 

royemunson

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I've even done tax amendments that the penalties were so small that
the IRS/state just didn't bother to try and collect since the people
corrected the error and paid the additional money.

The IRS can be "not so bad" to work with most of the time

Joe
 
OP
OP
andviv

andviv

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Thanks. I will call him right now and tell him to send it today. I told him last night to hold on the payment before somebody here could provide me with some info.

Thanks to all of you.
 

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