Underpaid my taxes last year and got hit with a penalty, code 6645. I was hoping that since this is my first penalty (and my Wife's, we're MFJ) that I could use and FTA, but based on this it doesn't look like it:
20.1.1.3.3.2.1 (03-29-2023)First Time Abate (FTA)
IRS provides administrative relief from the following penalties if the qualifying criteria contained in this subsection are met:
Failure to File (FTF) penalty under IRC 6651(a)(1), IRC 6698(a)(1), or IRC 6699(a)(1),
Failure to Pay (FTP) penalty under IRC 6651(a)(2) and/or IRC 6651(a)(3), and
Failure to Deposit (FTD) penalty under IRC 6656.
Just wanted to check before I go start figuring out what forms to fill out
Am I correct in assuming that IR Code 6654 is not eligible for a First Time Abate?
byu/_me intax
Posted by _me
2 Comments
Correct. The Underpayment penalty is not eligible for First Time Abate.
That’s correct, no FTA.
IRC 6654 is underpayment of estimated tax. The “penalty” is really just interest from the quarterly due dates to the payment dates. Interest generally can’t be waived, so the FTA won’t waive this “penalty that’s really interest in disguise.”
You do have the option to file Form 2210, including Schedule AI, if it would reduce or eliminate the penalty.