The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Mistakenly late RMD||Date: 1/19/2013 2:10 PM|
|Author: brucedoe||Number: 117418 of 121340|
I actually had this happen to me and your client is in for a ride and should be made aware of the Taxpayer Advocate Office in the IRS. but first, II paid the 50% penalty but then applied to reclaim it because I had no intent to defraud the government. As I recall you can do this on the form. I quickly got the refund from one IRS office (maybe Memphis) after going through a resolution office I think in Washington, D.C., when I supplied them with all the paperwork, but then received threatening letters from the Philadelphia office wanting the 50% with interest and penalties and claiming I had never paid the penalty. When I sent them the package of all the increasing paperwork (added letters etc.) They replied I was too late and they had turned the matter over to a collection agency. Someone on this board told me about the Taxpayer Advocacy Office and I went 70 miles to one with a yet larger package of paperwork. They accepted the case and was told they would handle it from there. First I got a notice after several months that I was relieved of the interest and penalty charges. Then a few months later I was forgiven the whole matter. I think the whole process took 7 mo.!
My own suggestion is that the person shouldn't screw around with this and should pay the penalty with their tax form and claim a refund in a place on the form and be ready to go to the Taxpayer Advocacy Office with all the paperwork. Don't throw ANYTHING away and prepare to do a lot of duplicating. It is important that the client be able to show she has paid the penalty.
I don't know how typical my case was, but my guess is that she will get her money back if she sticks to it and doesn't give up. Once the IRS goes off the track, it is a mess.
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