Participants' pension plan failed to make timely RMDs (i.e., "age 70½" distributions). Thus, participants must pay the 50% excise tax imposed by Code § 4974. They will attach the letter (outlining the mistake and the reasonable steps being taken to correct it and begging for a waiver) to their Forms 5329. Does anybody know how tough the IRS is on such requests?
Thanks.
Here's what my own experience has been:
The IRS will waive the I.R.C. Sec. 4974 excise tax on a first-time failure.
Things become more difficult if a taxpayer has multiple failures in different years. The IRS is likely to take the position that there's a lack of reasonable error. It's possible, but much more problematic, to get the excise tax waived over and over again.
The IRS will waive the I.R.C. Sec. 4974 excise tax on a first-time failure.
Things become more difficult if a taxpayer has multiple failures in different years. The IRS is likely to take the position that there's a lack of reasonable error. It's possible, but much more problematic, to get the excise tax waived over and over again.
That makes sense. Thanks for the response.
QUOTE (Lori Friedman @ Mar 2 2005, 01:12 PM) 
Here's what my own experience has been:
The IRS will waive the I.R.C. Sec. 4974 excise tax on a first-time failure.
Things become more difficult if a taxpayer has multiple failures in different years. The IRS is likely to take the position that there's a lack of reasonable error. It's possible, but much more problematic, to get the excise tax waived over and over again.
The IRS will waive the I.R.C. Sec. 4974 excise tax on a first-time failure.
Things become more difficult if a taxpayer has multiple failures in different years. The IRS is likely to take the position that there's a lack of reasonable error. It's possible, but much more problematic, to get the excise tax waived over and over again.
How long does it take the IRS to act on a first-time failure?
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