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Penalty: Failure to pay proper estimated tax

At least 5 of my clients have received a CP24 letter from IRS notifying them of a “failure to pay proper estimated tax” penalty for tax year 2023. I’ve never had a client receive these letters in the past. My tax software calculates this penalty if the taxpayer is subject to it. It is a legitimate penalty for not paying in enough throughout the year and instead saving a large balance due for year end or April 15th.

It’s basically a charge for the IRS not being able to use your money throughout the year. The tax system is supposed to be a “pay as you go” system, and if you don’t abide, whether intentional or not, they have the right to penalize you.

I don’t disagree with this, but what has been problematic this year is the letters. The first few clients who received the letter reached out to me confused, thinking they owed more money, when in reality, the penalty had already been calculated, included and paid with the original return. The letter showed a zero balance due, but the way the information was written and presented left each client feeling stressed out and possibly doubting my reliability as their tax professional. Their return was prepared accurately, the penalty was accurately calculated and reported on the return and the client paid the balance. What is the point of sending the letter?

Now most recently, I’ve had two more clients receive the letters and these are assessing even more penalty than what I calculated. I believe this to be inaccurate, so I advised one client to call the phone number listed in the letter and ask if it could be reduced or abated based on his facts and circumstance, or atleast get an explanation for why it’s so much higher than what was originally reported and paid.

It’s so frustrating because I need to charge for my time to investigate and handle things like this, but the time it takes to even get through to someone at IRS makes paying for this type of service unaffordable for most people. That’s why in this particular circumstance I advised the client to call on his own and then report back to me.

I had told him “hopefully you’ll get someone nice when you call.” His first words, “I definitely did not get someone nice.”

He went on to explain that not only was the agent not nice, he was actually incredibly rude and derogatory, despite my client being kind and respectful in his requests. He also told my client that nothing could be done about the penalty, even though the IRS website seems to communicate a different message.

It is embarrassing to me as a professional that my client was treated the way he was today by the IRS Customer Service Representative. We are essentially a customer of the IRS, and taxes are one of our biggest expenditures. We deserve to be treated better. We deserve to be able to get customer service in a timely fashion from people who are educated about the US Income Tax system, rules, policies and procedures.

If the IRS is going to make a change to a tax return and assess an even larger penalty, the least they can do is provide an explanation of the penalty calculation, and as noted online, at least entertain the possibility of penalty abatement when the client has always been in compliance up until now and simply had a great year in his business which put his quarterly estimated tax payments short.

The system is broken and we all deserve better! Do you have a story you’d like to share about an interaction you have had recently with IRS? Please email me at and I’ll help spread the word.

Thanks for reading 😊

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