form 843 request for first time penalty abatement both failure to file and failure to pay

[Austin_Cat]

Hello friends! As the subject line says, this client has penalties for both failure to file timely and failure to pay. Couple of questions. In Pro Connect, is it sufficient for line 6 to just type in 6651(a)(1) or do I need a specific manner of citing code? That leads to the second question, pro connect will not allow more than 13 characters, so must I fill out a separate form 843 for each penalty type, citing code section 6651(a)(1) on one and 6651(a)(2) on the other? or is there a workaround so that 2 forms need not be filed? I appreciate any advice or wisdom you have to share! Have a great day!

[George4Tacks]

IRS and the states do a really good job assessing these penalties correctly they are determined by the date the payment is made and when the return is filed. I have always told the client  It will be about $xxx.yy  and you will get a bill. If it off too much, give me a all.

Just file the return and pay the tax. Wait for the letter. Even if you jump through all the hoops to get it right you do not know how long the agency takes to process. There is almost always a difference and a LETTER. I hate LETTERS, but I expect LETTERS for this one.\

 
Get the return filed as quickly as possible.,

[BobKamman]

I've never heard of using Form 843 for "First Time Abate," but apparently it's a thing.  You can do it with a phone call (if you like listening to music on hold) or with a short letter.  

"How to request First Time Abate
Follow the instructions in the IRS notice you received.

Some penalty relief requests may be accepted over the phone. Call us at the toll-free number at the top right corner of your notice or letter. You don't need to specify First Time Abate or provide supporting documents in your request for relief. We will review your account information to see if you meet the requirements for First Time Abate.

If you choose not to call, send a written statement or Form 843, Claim for Refund and Request for Abatement."

https://www.irs.gov/payments/administrative-penalty-relief#eligible 

[Austin_Cat]

Thanks to you both. Still not sure how to use the software to specifically request failure to file AND failure to pay. I don't even see an option to do two forms. Also this is 2023 and return has been filed but we are going to amend it. I already researched that and you still request the penalty abatement even though you have not amended the prior year return as of yet. If anyone knows differently please let me know and thank you so much again. Maybe I misunderstanding and form 843 is not filed alone but with the return (amended in this case)?

[BobKamman]

It would help to know a little more about the situation.  Refund on the original return, but now you owe?  Or tax owed on the original return, it was filed late, and tax not paid?  Or tax paid but still late?  Now amending to reduce the tax, or add to it?  

I wouldn't expect the software to handle penalty abatement.  Long way around the barn.  

[Austin_Cat]

Thank you! Sorry...yes more details. This is a new client for me and the prior year preparer left out a composite 1099 which had a loss of over 3K. I found it on the client's transcript which I had permission to view. Client currently owes around 9k and has made a payment plan with IRS. I would like to run the numbers to amend and see what the capital loss brings the liability down to. I think an amendment is necessary either way. I researched it a bit more and I believe that I need to file the amended return 1040 X, then file the 843 once it is processed. Have I done in something out of order in asking the client to make a payment plan first?

[BobKamman]

Are you sure he hasn't had to pay any penalties for the three prior years (2020-2022)?  Like a new kid showing up for class claiming to have perfect attendance at the last school.  Trust, but verify.  Anyway, this is what the IRM says about the FTP penalty continuing to accrue.  The abatement isn't finished until the tax is paid.  

"Note:  If the tax is not paid in full on the module that meets FTA criteria, allow abatement of the FTP penalty under the FTA waiver and use reason code (RC) 062 with the TC 271. While the FTA waiver is an administrative waiver and not reasonable cause, the RC 062 will not restrict Master File from continuing to compute the FTP penalty on the unpaid tax and is to be used in this instance only.An open paragraph must be used in Correspondex Letters 168C, 3502C, and 3503C to inform the taxpayer that the FTP penalty will continue to apply to the unpaid tax. After the tax is paid in full, the additional FTP penalty can be removed under the FTA waiver."

[Austin_Cat]

Thank you sir for your time and information I did not have previously on the payment in full requirement. This has been a great help and I wish you a good evening/morning/day, wherever you are located.