I just got a letter from the IRS.
Seems my accountant added a $30 fine to my payment to cover a late estimated payment.
But, the IRS claims that I overpaid my taxes by $30. I asked my kids what they think should happen. Answers were 1) send me a check for $30. 2) Credit next years account and 3) Sorry - we’re keeping your $30, be more careful next time.
All were wrong. For paying $30 too much I
1) have to pay a penalty of $208.
2) pay interest of $122 (not sure on what - the penalty?)
3) BUT- I do get credited for the $30, so I only have to pay $300.
Ironic thing was, my one daughter was asking for help on her history question “Why were the colonies leary of creating a country with a centralized form of government?”
I think she figured it out as I was pacing acround the room waving the IRS letter around in the air, yelling and ranting.
It sounds like the IRS didn't think the $30 was enough to cover the penalties and interest for your late estimated tax payment. Sometimes, the letters they send out are an exercise in obscurity.
Of course, the other possibility is they mad a mistake. I got assessed a penalty for late payment when I had filed an extension with what ultimately turned out to be the correct payment amount.
Despite having signed the return receipt (green) postcard and cashing the check, they lost the filing for extension. Eventually, they closed the matter, but their reason was: "you've always paid on time, and we are granting you this one-time forgiveness".
I couldn't make up a more absurd story.
And you are going to be smart and pay the $300, right? Seriously, not worth messing around with.