Abatement?

[FundeK]

I have searched the boards and come up empty handed.

Has anyone had the scenario where a participant did not receive their RMD timely, so they submitted a letter to the IRS and a Form 5329 asking for a waiver of the 50% excise tax, but did NOT sent a check with the request for waiver?

What happens if you don't submit the check?

[Demosthenes]

First the caveat, "consult a tax professional"

That said, penalties and interest will be assessed. The forms are computer processed and will generate a demand letter, post 4/15.

The "river of tears" letter (explaining why this happened and why it's not the taxpayer at fault) has to be read by a person and a judgement call made. The two are not likely to hook up in the IRS's system. The fact that the instructions specifically say you have to pay the excise and they were not paid, is also not a point in the tax payer's favor

If it's this tax year, file an amended return and pay the tax. Let the letter work through the system and hopefully get the refund.

[david rigby]

... and hopefully get the refund.

And hold your breath.

[Dan]

If the taxpayer was supposed to receive the RMD by December 31, 2004, but was distributed when discovered on January 7, 2005, does the taxpayer file for the 2004 tax year or the 2005 tax year?

[mbozek]

The IRS has accepted requests for abatement of the 50% tax without the payment where the fault was the result of a third party e.g., custodian, who failed to distribute the check by year end and provides the taxpayer with a letter taking full responsibility for the missed MRD to attach to the 5329. The custodian is not going to pay the penalty for the taxpayer up front because the refund would be made to the taxpayer and not the custodian and the custodian will never know if the IRS abated the tax.