Level 2

underpayment penalty refund

Forum|Forum|2 years ago
May 2, 2024
2 replies
0 views

I've had three 1040 clients this week tell me that they got a refund check for the underpayment penalty that was calculated on their 2023 return in ProConnect Tax. The underpayment penalty calculations for all three of these clients appear to be correct to me (i.e. there's no reason they would be exempt from the penealty). Is anyone else experiencing this? Am I missing something? Is there a glitch in the 2210 calculations in ProConnect?

P

ptax255

Level 6

Are they in CA?

J

JimOfficeheadAuthor

Level 2

Thanks for asking. No, no CA or other disaster area relief would apply as they are all in the Chicago area.

BobKamman

Level 15

Thumbs up for "unintentionally funny."

L

Lizhoh

Level 3

Some of my clients are also getting a refund of their penalty in the Chicagoland area.

BobKamman

Level 15

Apparently storms and floods in Cook County and surrounding counties in mid-September were enough to trigger a disaster declaration, and IRS extended the January 15 payment date to February 15. Are these notices clear enough to show that a month's grace period has been allowed?

https://www.irs.gov/newsroom/irs-announces-tax-relief-for-taxpayers-impacted-by-severe-storms-and-flooding-in-parts-of-illinois

Glen

Level 3

Refund amounts are as follows so far - $162, $633, $235, $430, $230, and $232.

I did get through to a phone rep on the IRS Practitioner Priority line and asked about one specific return. She could offer no detailed explanation as to why the entire penalty was refunded, and agreed with me that the taxpayer had not met any of the safe harbor requirements. The taxpayers' record reflected that a CP30A notice (reduction of penalty) was generated; the taxpayer has not received the notice. She also indicated that she had been receiving numerous calls about this exact issue in the last few days, but could not verify the geographical location of the taxpayers. She indicated she would escalate the general issue to her manager for further investigation. I guess we just wait to see if explanatory notices start showing up in taxpayers' mail boxes.

Received CP30A for one client; discrepancies are as follows:

1st installment - IRS penalty calc appears to be accurate.

2nd installment - IRS used 6/15/2023 to 6/29/2023 (14 days), whereas client had an underpayment from 6/15 to 9/15 (92 days).

3rd installment - IRS did not assess a penalty, whereas client appears to have an underpayment.

4th installment - IRS used 2/15/2024, as BobKamman suggested.

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