What This Notice Means
This one is good news. Your return reported a penalty for underpaying estimated tax. The IRS reduced or removed that penalty because the amount you entered was more than the maximum it can legally charge.
The IRS based its figure on your account information at the time it received your return. If your address is in a federally declared disaster area, the change may come from an automatic penalty waiver.
What to Do
Review the account information on the notice. Compare it with your own records.
If you agree, you don't need to respond. Keep the notice with your tax records.
If the IRS reduced or removed the penalty by mistake, return the refund with a written explanation.
If You Disagree
Call the number on your notice and explain why you disagree with the correction. If the IRS agrees with you, it will tell you what to do next.
About Your Refund
If the notice says you'll get a refund and it hasn't arrived, there may be a reason. The IRS must first use a refund to pay other taxes you owe. It may also apply it to child support, state taxes, or other debts it's required to collect. It can hold a refund if you haven't filed all required returns. Call the number on your notice to check the status.
Avoiding the Penalty Next Year
Corporations must make estimated tax installments when the total tax for the year, minus credits, is expected to be $500 or more. Installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If a date falls on a weekend or legal holiday, it moves to the next business day. Payments must be made by electronic funds transfer.
Form 1120-W is the worksheet for figuring estimated tax. If a corporation overpays, Form 4466 may get it a quick refund of the overpayment.
If you have questions about a CP173B or other IRS penalties on your account, call us at (813) 229-7100.