This can retroactively remedy tax underpayments from earlier in the year and avoid a potential underpayment penalty.
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Interest at the appropriate underpayment rate must be paid on tax payments received after November 16, 2011.
Rather than accept what it believes is an underpayment, the studio is refusing to take any money until the issue is resolved.
Guess too low and you will get nailed for an underpayment penalty.
What you should do about this is dependent on which tax year the underpayment related to and when (and why) it was actually issued.
Finally, on top of the taxes and interest, they must pay an accuracy-related penalty equal to 20 percent of the underpayment of tax, plus interest.
For her persistence, Rogers was rewarded with a 20% underpayment penalty.
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That way you can avoid or lessen underpayment penalties, Guarino says.
As a result, Cherry, who is now a free man, was hit with a tax deficiency, failure to file penalty, and a 20% underpayment penalty.
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Petitioners neither argued that they acted nor introduced any evidence to show that they acted with reasonable cause and in good faith with respect to the underpayment.
One defense against the underpayment penalty is to make sure that your tax payments for 2006 (from withholding plus estimated-tax payments) add up to at least 110% of your 2005 tax bill.
Indeed, as I have written here, while the government loses hundreds of billions of dollars in revenues due to underreporting, non-filing and underpayment each year, the IRS simply lacks the resources to enforce the Code.
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"If customers use this option believing that having their underpayment coded out is still a valid option, we will show any underpayment in their PAYE tax code if they contact us and ask us to do so, " said the Revenue.
Affected couples could recompute their taxes and file new returns, but in a final kicker, a partner owing more tax would have to pay interest on the underpayment (offset, at least in part, by interest paid on the refund presumably going to the other partner).
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