Smythe & Weston LLP.
Prepared by: Eliot Nest
Produced: February 8, 2018 at 8:47 PM
Client: William Bonnet
SSN: 045-23-7653
Reference no: 2017-04-01
| Inputs | |
|---|---|
| Taxpayer Type: CCorporation | Amount Due: $250,000.00 |
| Tax Year: 2014 | Extension: No |
| Return Due Date: 3/15/2015 | Tax Due Date: 3/15/2015 |
| Date Return Submitted: | Payoff Date: 4/4/2017 |
| Other Inputs |
|---|
| On 3/16/2015 an interim payment of $75,000.00 was made. |
| On 2/18/2015 the IRS sent an invoice for tax due. |
| On 1/11/2017 the IRS sent an notice to levy assets for unpaid tax due. |
| On 1/13/2016 the IRS sent a first letter offering the right to appeal. |
| Complete Failure to File Penalty Calculations | |||
|---|---|---|---|
| Date | Citation | Explanation | Amount |
| 3/16/2015 | IRC §6651(a)(1) | The failure to file penalty is calculated at 5% per month for each month the return was late. | |
| 3/16/2015 | IRC §6651(c)(1) | The failure to file penalty rate is reduced to 4.5% per month when the failure to pay penalty also applies. | |
| 3/16/2015 | IRM 20.1.2.2.7.2 | The failure to file penalty is calculated based on the amount of tax required to be shown as tax on the return. In this case, the amount is $175,000.00. This number is calculated by taking the tax due per return of $250,000.00, adding IRS adjustments of $0.00, and then subtracting payments and/or credits that were made by the due date of $75,000.00. | |
| 3/16/2015 | The failure to file penalty is calculated for 5 months at a rate of $7,875.00 (4.5% of $175,000.00) per month. | $39,375.00 | |
| 7/16/2015 | IRM 20.1.2.2.7.2(1)(A) | There is no further failure to file penalty because the maximum penalty has been reached. | |
| Total Failure to File Penalty: | $39,375.00 | ||
| Complete Failure to Pay Penalty Calculations | |||
|---|---|---|---|
| Date | Citation | Explanation | Amount |
| 3/16/2015 | IRC §6651(a)(2) | The failure to pay penalty is calculated at a rate of 0.5% per month for each month the failure continues. | |
| 3/16/2015 | IRM 20.1.2.2.8.4.1 | The failure to pay penalty is calculated on a base amount of $175,000.00. This number is calculated by taking the amount of tax shown on the return of $250,000.00, and subtracting payments and/or credits of $75,000.00, which were made before the start of the next month beginning on 3/16/2015. | |
| 3/16/2015 | The failure to pay penalty is calculated for 23 months at a rate of $875.00 (0.5% of $175,000.00) per month. | $20,125.00 | |
| 1/21/2017 | IRC §6651(d) | The levy notices causes the failure to pay penalty rate to increase to 1% | |
| 2/16/2017 | IRM 20.1.2.2.8.4.1 | The failure to pay penalty is calculated on a base amount of $175,000.00. This number is calculated by taking the amount of tax shown on the return of $250,000.00, and subtracting payments and/or credits of $75,000.00, which were made before the start of the next month beginning on 2/16/2017. | |
| 2/16/2017 | The failure to pay penalty is calculated for 2 months at a rate of $1,750.00 (1% of $175,000.00) per month. | $3,500.00 | |
| 4/4/2017 | The calculation stopped due to reaching the payoff date. | ||
| Total Failure to Pay Penalty: | $23,625.00 | ||
| Complete Interest Calculations | ||||
|---|---|---|---|---|
| Date | Citation | Explanation | ||
| 3/15/2015 | IRC §6601(a) | The interest calculation is initialized with the amount of tax due per return of $250,000.00 (payments are subtracted later). | ||
| IRC §6621 | Interest is computed to the nearest full percentage point of the Federal short term rate for that calendar quarter, plus 3%. | |||
| 3/15/2015 | IRM 20.2.5.3(2) | Interest will start accruing on the failure to file penalty of $39,375.00, bringing the interest base to $289,375.00. | ||
| Rev. Proc. 95-17 | To calculate IRS interest multiply the factor provided in Rev. Proc. 95-17 by the base amount owing. In leaps years, use these Rev. Proc. 95-17 factors. | |||
| Date | Factor | Explanation | Amount | Total |
| 2/18/2015 | IRM 20.2.5.3(1) | Due to the receipt of notice, interest starts being charged on the failure to pay penalty of $23,625.00, from the date of the notice. | ||
| 3/16/2015 | A payment was made in the amount of $75,000.00 reducing the amount on which interest is calculated to $238,000.00. | |||
| 3/16/2015 | 0.000082192 | Interest was compounded at 3% of $238,000.00 for 1 days | $19.56 | $19.56 |
| 3/31/2015 | 0.001233586 | Interest was compounded at 3% of $238,019.56 for 15 days | $293.62 | $313.18 |
| 6/30/2015 | 0.007507183 | Interest was compounded at 3% of $238,313.18 for 91 days | $1,789.06 | $2,102.24 |
| 9/30/2015 | 0.007589992 | Interest was compounded at 3% of $240,102.24 for 92 days | $1,822.37 | $3,924.61 |
| 12/31/2015 | 0.007589992 | Interest was compounded at 3% of $241,924.61 for 92 days | $1,836.21 | $5,760.82 |
| 2/12/2016 | 0.003530664 | Interest was compounded at 3% of $243,760.82 for 43 days | $860.64 | $6,621.46 |
| 2/12/2016 | IRC §6621(c)(3) | Hot interest begins - the interest rate is increased by 2%. | ||
| 3/31/2016 | 0.006578473 | Interest was compounded at 5% of $244,621.46 for 48 days | $1,609.24 | $8,230.69 |
| 6/30/2016 | 0.015028621 | Interest was compounded at 6% of $246,230.69 for 91 days | $3,700.51 | $11,931.20 |
| 9/30/2016 | 0.015195019 | Interest was compounded at 6% of $249,931.20 for 92 days | $3,797.71 | $15,728.91 |
| 12/31/2016 | 0.015195019 | Interest was compounded at 6% of $253,728.91 for 92 days | $3,855.42 | $19,584.33 |
| 3/31/2017 | 0.014903267 | Interest was compounded at 6% of $257,584.33 for 90 days | $3,838.85 | $23,423.17 |
| 4/4/2017 | 0.000657696 | Interest was compounded at 6% of $261,423.17 for 4 days | $171.94 | $23,595.11 |
| Total Interest: | $23,595.11 | |||
| Messages |
|---|
| • The tax due date has been adjusted from 3/15/2015 to 3/16/2015 to account for weekends and/or holidays. |
| • The return due date has been adjusted from 3/15/2015 to 3/16/2015 to account for weekends and/or holidays. |
| Summary Conclusion | ||||
|---|---|---|---|---|
| Description | Amount | Interest | Credits | Balance |
| Tax Due | $ 250,000.00 | $ 17,349.35 | $ 75,000.00 | $ 192,349.35 |
| Penalty Type | Amount | Interest | Credits | Total |
| Failure to File | $ 39,375.00 | $ 3,903.60 | $ 0.00 | $ 43,278.60 |
| Failure to Pay | $ 23,625.00 | $ 2,342.16 | $ 0.00 | $ 25,967.16 |
| Subtotal | $ 63,000.00 | $ 6,245.76 | $ 0.00 | $ 69,245.76 |
| Grand Total | $ 313,000.00 | $ 23,595.11 | $ 75,000.00 | $ 261,595.11 |
This report produced using software at www.irscalculators.com
Disclaimer: These penalty and interest calculations service attorneys, accountants, enrolled agents, and individuals or businesses to provide accurate calculations for the failure to file, failure to pay, and accuracy-related penalties. The provided calculations do not constitute financial, tax, or legal advice. Our sole and only guarantee or warranty is that anyone that influences us to change our algorithm will receive $100.