Hello, my wife's mother passed away in mid November 2019, and my wife used a local CPA firm to prepare her mother's final taxes as decease payer. Due to COVID and other logistics, taxes were not withheld and quarterly estimated taxes were not made to the state during 2019. The local CPA firm did not file the tax return until a few days after October 15, 2020, the extended deadline for filing. My wife received an interest and penalty letter from Michigan State showing proposed interest and penalty totaled to about $190 several weeks ago with a respond by date of 12/23/2020. My wife provided the letter to the local CPA right away, who said that they would review the letter, but so far there have been no communications from them (my wife tried to contact them several times asking about the status). Questions:
1. What happens if my wife or the CPA firm did not respond to the state's letter by the due date of 12/23/2020? Would there be additional penalties if she does not respond by the due date?
2. Should my wife just go ahead and pay? If so, can she pay online?
3. If she pays by check, would the respond date or deadline be based on the mailing posting date on her letter with the check payment?
4. Someone said people can ask the Federal and State for a one-time waiver of penalty due to COVID. Is it true in general?
Thank you.
sorry for your loss
1. What happens if my wife or the CPA firm did not respond to the state's letter by the due date of 12/23/2020? Would there be additional penalties if she does not respond by the due date? if you respond late the state may deny any request for abatement and additional penalties and interest would probably accrue.
2. Should my wife just go ahead and pay? If so, can she pay online? up to you and don't know about how to pay what does the notice say? if you pay electronically you can't include a request for abatement.
3. If she pays by check, would the respond date or deadline be based on the mailing posting date on her letter with the check payment? the date she sends it should be on the date on the check. no letter is required unless you are going to request abatement but then I would not send a check. you are so near the deadline it might not reach the state in time. see my answer to 1 above.
4. Someone said people can ask the Federal and State for a one-time waiver of penalty due to COVID. Is it true in general? yes, you can request abatement (don't use Covid since many taxpayers paid and filed timely). I would use the confusion created by the death. but you are so close to the deadline the state may deny it. if you send a check some states would acknowledge that as agreeing to the penalty and the letter would do no good. the decision is completely up to the state.
Thank you for the reply, upon reading the Notice again, it say the state will issue and Intent to Assess, after the response due date. So it looks that the Notice is not final if I send it a request for changes. Since the respond due date is only 2 days away, and I am not getting a response from the local CPA firm that prepared my mother-in-law's deceased return, should I at least send a letter to request waiver of the penalty? What do you suggest?