Forgiving & Forgetting a Late Tax Return
TAX ADVICE from Julian Block
(November 4, 2004) My experience
as an attorney who provides advice on taxes is that people
frequently learn the expensive way that the IRS slaps
stiff penalties on tardy taxpayers who miss the deadlines
filing returns or making payments. To get the feds to
waive a penalty, you have to convince them that the delay
to reasonable cause and not due to willful neglect."
The tax enforcers have long-standing guidelines on what
this means. Though the agency tells its examiners to judge
each case by its own facts, there are certain circumstances
that will generally excuse a late filing or payment.
So what cause is reasonable? Here are
some IRS examples of generally acceptable excuses.
Records not available: For reasons beyond the taxpayer's
control, records necessary to compute the tax were not obtainable.
Late delivery: While the taxpayer mailed the return or
payment in time to reach the IRS by the deadline, through
no fault of his, it was delivered late.
Bad IRS information: The taxpayer failed to timely file
the return or pay the tax after receiving erroneous information
from an IRS employee; or the necessary forms and instructions
were not provided by the IRS in time, despite a timely request.
Records destroyed: The taxpayer's residence, place of business
or business records were destroyed due to a fire, other casualty,
or civil disturbance.
Death: The death or serious illness of the taxpayer or
a member of his or her immediate family occurred. Where the
taxpayer is a corporation, estate, trust or the like, the
individual affected must be the person who has sole responsibility
for executing the return or making the deposit or payment,
or is a member of that person's immediate family.
Absence: The taxpayer is unavoidably absent. Again, in
the case of a corporation, estate, trust, etc., the absent
person must have had sole responsibility for executing the
return or making the deposit or payment.
IRS fumble: The taxpayer can prove that he personally visited
an IRS office before the filing date to get information or
aid to make out the return and, through no fault of his own,
was unable to meet with an IRS representative.
TIP. How can you prove that you were there and did not
see someone? Presumably, you do so by the testimony of
the person you did not see. This tactic is what the lawyers
a negative." I do not recommend it. Death or serious
injury is more persuasive.
Bad advice from
a good source: The taxpayer relied on the
incorrect advice of a competent tax professional, used normal
prudence in determining whether further advice was needed
and, as a result, came to the conclusion that a return was
CAUTION. Is there reasonable cause that excuses a late-filing
penalty where a taxpayer relies on an attorney or accountant
to make a timely filing? No, according to a decision by the
The justices unanimously concluded that the taxpayer
is stuck with the penalty, even when an attorney causes
delay. Congress chose to place the burden of complying
with filing deadlines on the taxpayer, not on an attorney
or accountant or some other agent or employee of the taxpayer. "One
need not be a tax expert to know that returns have fixed
filing dates and that taxes must be paid when they become
due," the high court pointed out.
Julian Block lives in Larchmont and is a syndicated
columnist, attorney and former IRS investigator who
the New York Times has called “a
leading tax professional.”
His “Year Round Tax Savings” shows
how to save big money on taxes – legally. To
purchase a copy, email: at email@example.com.
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