File form 7004 for 1120s/.1065 but still got late filing penalty from IRS

[Jxu98]

Dear Expert,

    I asked the question yesterday but I cannot find the message so I ask again. I apology if this appears twice.

    I filed form 7004 to automatically extend the filing for my 1120S and 1065 (two separate small business) in January, and I filed 1120S and 1065 in September before the extension deadline. However I still received two penalty notices from IRS for not filing returns on time.

    I mailed the two forms 7004 using the regular mail, but I have the post office receipts as well as the copies of form 7004. In the past several years, I always did the same thing but never had  issues. I tried to call IRS but the receptionist appeared rude and impatient. She said even I filed form 7004, it does not mean IRS would approve the extension.

    What your advice to handle such a situation?

Thanks,

jxu98

[Katherine S 63 · Accepted solution]

Hello,  this is a great question!

I am sorry this happened.

The only thing that might work would be to try to have a waiver of the penalties by filing a letter.

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-corporations-penalty

Here is the part I am looking at: 

"Dispute a Penalty

While we can't adjust the Underpayment of Estimated Tax by Corporations Penalty for reasonable cause, we may consider making an adjustment if we imposed the penalty after you relied on incorrect written advice we gave you.

Check if you meet the following criteria:

• The written advice we gave you was in direct response to your written request for advice
• The incorrect written advice we gave you was not the result of material omissions or misinformation in your written request for advice
• You reasonably relied on our written advice and were penalized based on that advice

If you believe you meet the criteria, mail a statement signed under penalty of perjury that describes how our erroneous written advice resulted in the penalty. Include a copy of both the written request for advice you sent us and our written response. Mail the original statement and copies of the supporting documents to the address on your penalty notice. Keep a copy of the documents you sent to us.

When you sign a statement under penalty of perjury, you may be found guilty of a crime if you knowingly lie in your statement. "

As you can see it does not have to do with extensions but I think this is they way to request the abatement of penalties.  Send in a copy of the extension that you filed.  I don't see an address to send this letter.  You can try faxing it to 855-215-1627 but I would also call them and ask where you would send the letter.  Make sure you send it certified mail so you have a record and keep copies of everything you send them.

I hope this goes smoothly for you.

Please give me a thumbs up if this was helpful.

Katie S.

[Mike9241]

what the IRS says to do if you dispute the penalty

Dispute a Penalty
If you disagree with the amount you owe, you may dispute the penalty.

Call us at the toll-free number at the top right corner (you likely won't get the same person as the first time) of your notice or letter or write us a letter stating why we should reconsider the penalty. Sign and send the letter along with any supporting documents to the address on your notice or letter.

Have this information when you call or send your letter:

The notice or letter we sent you
The penalty you want us to reconsider
For each penalty, an explanation of why you think we should remove it
If you didn’t receive a notice, get telephone assistance.

Businesses
800-829-4933
7 a.m. to 7 p.m. local time

[Jxu98]

Hi Katie,

    Thank you so much for your reply! I sent a letter with the copy of the 7004 form I file and the post office receipt using the certified mail. I am wondering if IRS will process my request on time? Otherwise, they may add more late penalty to me. Maybe I need to pay the penalty first and then request a refund?