interest, & penalty & failure to file for excess IRA contributions- multiple years
I am curious how long the IRS has to collect interest and penalties once they received form 5329’s for excess IRA contributions along with the tax due. I sent in the forms, they cashed the checks, and now i’m waiting. It has been since Feb 2022. Is there a status of limitations or do i just sweat it out for the next 10 years.
Thanks
Permalink Submitted by Alan - IRA critic on Sat, 2022-11-05 15:59
It’s not clear whether the IRS consistently collects late interest or adds other penalties, although they are allowed to. Further, their service is seriously backlogged since the start of Covid, and it is also not clear whether this backlog is causing them to overlook these bills or not. Any accrual of interest would have ceased when they received your excise taxes, so you are not incurring further interest at a time when interest rates are rising sharply. Taxpayers have not been posting any questions about this issue over the last several years, so there is a good chance that the IRS has not been billing these fees, even pre Covid. If there is a statutory deadline, perhaps the IRS cannot meet their own deadline either, but I don’t know what that deadline is. You will just have to wait, and after another year you can probably assume that you will likely not be billed.