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