Question on IRS Penalties for Underestimation of Income

[FLM2]

"You need to use the best answer you have as of this time. The application requires that you notify the marketplace if there is a change in your application, including income. When you file your taxes, a reconciliation will be completed and you will owe any subsidy money you should have not received, but the opposite is also true. If you were owed more money via the subsidy, that will be returned to you. Beyond that, I am not a CPA and can't even play one on TV. You need to contact your CPA."

THAT is the correct answer to the question. Don't game the system. One way or another, you are going to pay the correct amount.

And its not a penalty. Its an adjustment to the subsidy you should have/have not received. There's a difference.

I guess those of us who do this for hundreds of clients a year for virtually nothing in compensation actually do know the system, huh?

 

[walthamny]

If someone receives a penalty on their tax return for underestimation of their income for the ACA tax credit, is this penalty something the IRS can collect? I know that the IRS does not actively try to collect penalties for not having insurance, but what about the penalty related to underestimation of income? I have clients that are asking me and I have called some CPA firms and not gotten clear answers. Appreciate hearing from any of you on this. Thanks!

Most CPA's would not want to answer this because it gets political. Republicans did not fund the part of Obamacare that allows IRS to collect the health care tax penalty. So IRS does not have the man power to just collect this tax. However, if you are due a refund now or in the future, they can apply it against that. Now we don't know if IRS can use the non payment of health care tax as an excuse to look at other things on your return. Legally, they can make you substantiate every deduction item line by line for the last 3 years. Do you want to take the chance. Do you want to take the chance as a CPA and advise this to one client and have the IRS come back against CPA' whole client list.

 

[kgmom219]

Most CPA's would not want to answer this because it gets political. Republicans did not fund the part of Obamacare that allows IRS to collect the health care tax penalty. So IRS does not have the man power to just collect this tax. However, if you are due a refund now or in the future, they can apply it against that. Now we don't know if IRS can use the non payment of health care tax as an excuse to look at other things on your return. Legally, they can make you substantiate every deduction item line by line for the last 3 years. Do you want to take the chance. Do you want to take the chance as a CPA and advise this to one client and have the IRS come back against CPA' whole client list.

Thats not my problem. I didn't take the CPA exam, I took the insurance and FFM exams. If your CPA chooses not to advise you on tax questions, I would get a new CPA.

 

[Yagents]

The is about aptc clawback. Not the penalty for being uninsured. Full money owed back up to limits if below 400% still. Unlimited clawback if above. Period. Every cpa must know how to file form 8329 if they do 1040's.

 

[taterpeeler]

we have some stupid arse agents... this is simpler than wiping your butt after a doodle do..... this is not a penalty... its a dang reconciliation of projected income as it relates to federal exchange plans.... there is an entire chapter on this, read the law.... lord help this industry... please go sell cars or some such

 

[FLM2]

The is about aptc clawback. Not the penalty for being uninsured. Full money owed back up to limits if below 400% still. Unlimited clawback if above. Period. Every cpa must know how to file form 8329 if they do 1040's.

we have some stupid arse agents... this is simpler than wiping your butt after a doodle do..... this is not a penalty... its a dang reconciliation of projected income as it relates to federal exchange plans.... there is an entire chapter on this, read the law.... lord help this industry... please go sell cars or some such

The only ones who understand this are those of us who do it for a living, period. Each of us says the same thing, IT'S NOT A PENALTY, IT'S A RECONCILIATION!

 

[LostDollar]

If someone receives a penalty on their tax return for underestimation of their income for the ACA tax credit, is this penalty something the IRS can collect? I know that the IRS does not actively try to collect penalties for not having insurance, but what about the penalty related to underestimation of income? I have clients that are asking me and I have called some CPA firms and not gotten clear answers. Appreciate hearing from any of you on this. Thanks!

Income Tax: Fraud vs. Negligence - FindLaw

What is Income Tax Fraud?

Income tax fraud is the willful attempt to evade tax law or defraud the IRS. Tax fraud occurs when a person or a company does any of the following:

Intentionally fails to file a income tax return
Willfully fails to pay taxes due
Intentionally fails to report all income received
Makes fraudulent or false claims
Prepares and files a false return

The IRS can usually distinguish when an error is the result of negligence or the willful evasion of the tax law. Tax auditors look for common types of suspicious and fraudulent activity, such as:

Overstatement of deductions and exemptions
Falsification of documents
Concealment or transfer of income
Keeping two sets of financial ledgers
Falsifying personal expenses as business expenses
Using a false Social Security number
Claiming an exemption for a nonexistent dependent, such as a child
Willfully underreporting income

Lack of answers is not too surprising, you're just asking a CPA to tell you it is ok to evade payment of income taxes (ie evade paying in the bottom line due on the return-tax, clawback, penalty whatever) because the government won't bother to collect what's due.

 

[FLM2]

Income Tax: Fraud vs. Negligence - FindLaw





Lack of answers is not too surprising, you're just asking a CPA to tell you it is ok to evade payment of income taxes (ie evade paying in the bottom line due on the return-tax, clawback, penalty whatever) because the government won't bother to collect what's due.

Mr Irrelevant posts again, did it take 10 days to do all that research?