dmertz
Level 15

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"the IRS 5329 instructions seem pretty adament about putting the tax due on 5329 line 55"

 

@RB287a , if you are looking at the instructions for Form 5329, you seem to be misinterpreting the instructions.  Those instructions say:

 

  1. Complete lines 52 and 53 as instructed.
  2. Enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.
  3. Complete line 55 as instructed. You must pay any tax due that is reported on line 55.

If you are requesting a waiver on the entire amount, line 54 will be zero.  The instructions for line 55 say to multiply line 54 by a percentage.  With line 54 being zero, the result of the multiplication will be zero on line 55.

 

The instructions go on to say, "If your request is not granted, the IRS will notify you regarding any additional tax you may owe on the shortfall."  If with the filing of the Form 5329 you were required to pay the excise tax on the amount on which you were requesting a waiver, the instruction would instead say, "If your request is granted, the IRS will send you a refund of the excise tax."  The instructions are written this way in an attempt to avoid having to issue a refund because the IRS almost never declines to grant the waiver.