double debit with penalty

[Taxprohere]

Efiling restrictions don't allow a greater direct debit than twice the tax due.  I have a client whose late filing penalty is 100% of tax, so balance is doubled but there's also a small amount of late interest and payment penalty.  I added to the debit and overrode the EF error when filing, but apparently this is a reject not simply on ProSeries' side of things? 

Annoying since I had to indicate debit only for the doubled amount, if the IRS is now going to send a notice (though only about $30 and I know there are contributors who have said they opt for IRS to calculate since often low amounts are ignored.)  Still, why limit the debit?!

Thoughts, opinions, one liners?

[Terry53029]

I would just have client direct deposit amount owed on IRS.gov, and not have it direct debit on the tax return. Could you give me a cite for the rule about efile restriction not allowing direct debit more than twice the tax due, as I have not known about that rule, and can't find it.

[Just-Lisa-Now-]

I wasnt aware you could tailor the debit amount for more than the amount shown on the return when paying through the software.

I agree with Terry, just use IRS DirectPay and make the payment for however much you want to pay.

Theres always a chance that the IRS computers will automaically refund the overpayment if the the IRS hasnt computed the penalty on the amount due yet (It doesnt happen immediately at the time of filing), so if youre paying the penalties ahead of when they've been assessed, this could happen.   

I generally let the client wait for the bill from IRS then pay the penalty/interest balance due. 

[IRonMaN]

"Thoughts, opinions, one liners?"

My thoughts are, for 30 bucks why mess around and fight the system?  For those dollars the IRS might not bother anyway.

My opinion is, I'm in the let the IRS  compute things camp.  Why make the client fork over cash that the IRS may or may not bill.  I let the client know the IRS may bill them later and leave it at that.

My one liner is - double debit with penalty sounds like something that would be served in an ice cream shop run by a bunch of accountants.

[dkh]

---

@IRonMaN wrote:

"Thoughts, opinions, one liners?"

My one liner is - double debit with penalty sounds like something that would be served in an ice cream shop run by a bunch of accountants.

---

hmmm... sounds like an interesting idea for a new business 

[IRonMaN]

I’m looking for investors if you are interested 😜

[rbynaker]

---

@IRonMaN wrote:

My opinion is, I'm in the let the IRS  compute things camp.  Why make the client fork over cash that the IRS may or may not bill.  I let the client know the IRS may bill them later and leave it at that.

My one liner is - double debit with penalty sounds like something that would be served in an ice cream shop run by a bunch of accountants.

---

I'm also in the "let the IRS do the math" camp.  Mostly because some things are calculated to the day and even if my client tells me what day they're going to make the payment, doesn't mean that's what's going to actually happen!  I will generally give them a number and aim on the high side.  "The IRS will send you a bill, if it's less than $x, just pay it.  If it's more, send me a copy first."

It's not a "double debit with penalty" but for the longest time I thought an Ariana Grande was something you got at Starbucks.

[BobKamman]

Does the client have a history of late filing, so the "one-time forgiveness" policy does not apply?

[Taxprohere]

Considering the last three years are being filed, and only 2022 has the balance...yeah, I think that's a no-go.  Client also not that tech-savy so I'm just going to give the heads up about a small amount due IF the IRS sends a notice.

[BobKamman]

I think you still get the one-time abatement even if earlier returns were late, as long as there was no penalty assessed.  But the prior-year returns should already be processed, which might not be the case if you are filing them at the same time.  

I don't know if the one-time abatement is automatic, or has to be called to IRS attention after the first notice.  And for a small amount, it might not be worth the effort.  

[Terry53029]

Here are the details on the one-time abatement

https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver