Talk:IRS penalties

Begin clean up
I've begun a clean up. The title of the article, "IRS penalties," is something of a misnomer. Referring to penalties imposed under the Internal Revenue Code as "IRS penalties" is rather like referring to a traffic fine imposed for operating a motor vehicle in excess of the speed limit as being a "police department penalty." The police department itself does not impose the penalty. The IRS is simply the government agency that is charged with most (but not all) of the enforcement of the U.S. federal tax laws.

Civil tax penalties (monetary penalties) are imposed by law (by statutes enacted by Congress), not by the IRS. Criminal penalties are imposed by law, not by the IRS.

In the criminal arena, the IRS only investigates federal tax crimes and makes recommendations as to whether an individual should be prosecuted. The decision to prosecute is made only by the Tax Division of the Department of Justice. Indictment is made only by a federal grand jury, not by the IRS. A criminal penalty for violating the Internal Revenue Code is imposed NOT by the IRS, but rather by a federal district judge in a judgment of conviction pursuant to a law passed by Congress, and under the federal sentencing guidelines -- after a trial with a guilty verdict or after a plea of guilty. (The federal prisons are run by the Federal Bureau of Prisons, which is part of the Department of Justice. Strictly speaking, that is the only role of the Department of Justice in actually meting out "punishment," if you will.) I have therefore removed most of the repetitive, misleading references in the article to federal criminal penalties. Famspear (talk) 14:54, 26 March 2013 (UTC)

Assessment comment
Substituted at 18:40, 29 April 2016 (UTC)

Information about certain penalties
The article contained the following verbiage, which I deleted:


 * When filing Form 1040, the penalty for failure to file or pay can be listed on the bottom margin of page 2 of the form, but should not be included on the amount due line (line 78).

Two sources were listed: the IRS web site and some sort of private weblog or private question and answer web page. The IRS web site is reliable, but the material I deleted is not supported by the IRS web site. The weblog is not a reliable source.

I suppose a person can "list" anything on a tax form, but that does not mean that the act conforms to the IRS instructions, etc., or that it is correct.

The space for the penalty at the bottom of page 2 of Form 1040 is the space for the penalty for failure to timely make installment payments of estimated tax under Internal Revenue Code section 6654.

However, there is no space on Form 1040 to enter the penalty for failure to timely file the tax return itself (Code section 6651(a)(1)). There is no space on Form 1040 to enter the penalty for failure to timely pay the tax shown on the return (Code section 6651(a)(2)). For those kinds of penalties, the taxpayer will generally receive a bill from the Internal Revenue Service.

Now, it's perfectly permissible to try to compute the 6651(a)(1) penalty and the 6651(a)(2) penalty yourself, and even to write the check to include not only the tax and the 6654 penalty, but the 6651(a)(1) and 6651(a)(2) penalties as well, but if you try to "write in" the amounts of the latter two penalties on your return, you might actually cause more problems than you solve. I have had at least one other CPA tell me that he had done this, and that it did cause a processing problem at the IRS for that tax return.

In short, the verbiage in the article wasn't really supported by the source material, or (in one case) the source was not reliable. Famspear (talk) 14:34, 29 June 2016 (UTC)

OK, another editor has pointed out the following verbiage to me, from the IRS web site:


 * You do not have to figure the amount of any interest or penalties you may owe. Because figuring these amounts can be complicated, we will do it for you if you want. We will send you a bill for any amount due.


 * If you include interest or penalties (other than the estimated tax penalty) with your payment, identify and enter the amount in the bottom margin of Form 1040, page 2. Do not include interest or penalties (other than the estimated tax penalty) in the amount you owe on line 78.

I had missed that when I looked at the source material earlier. Hopefully, because this is now an instruction from the IRS itself, this procedure hopefully would actually work, so I (hopefully) stand corrected. Famspear (talk) 14:42, 29 June 2016 (UTC)

PS: I am not saying that the IRS won't still have problems processing the return in this way. There are cases where neither IRS personnel nor the IRS computer are properly trained or "programmed" to follow the official IRS instructions. Famspear (talk) 14:44, 29 June 2016 (UTC)

PS: I just went back and checked, and these instructions, in one form or another, have been buried in the IRS instruction booklet for Form 1040 for at least 25 years. I have prepared literally thousands of Federal income tax returns for individuals, partnerships, corporations, estates, trusts, etc., from the simplest individual returns to returns for companies with billions in assets, for over 35 years, and I had never seen this before. Still learnin'! Famspear (talk) 15:15, 29 June 2016 (UTC)