Last April, as tax season was ending, I decided to take advantage of a little thing called filing an extension. I’d never done it before, because my taxes had always been pretty straightforward. Last year, however, was when MANteresting went from hobby to holy-crap-this-thing-is-growing-too-fast. My business partner and I decided to make MANteresting a LLC, where we both held 50% stakes.
Whenever two people get added to any equation things get more complicated. Jesse had some receipts from MANteresting bills he paid. I had some receipts from bills I had paid. And we even had some revenue to report too.
Since neither of us had operated a partnership before, we thought we would file personal tax extensions and deal with the LLC taxes this fall.
Apparently we are big idiots. Although we filed personal extensions, we didn’t know we also had to file a separate extension for MANteresting’s taxes.
Cue IRS Penalties.
I got a fun little letter in the mail last week from our friends at the IRS letting me know that MANteresting was five months late on filing a tax return. We were charged $195/month, per partner, resulting in a total financial obligation of $1,950 to be paid by October 30th.
I felt sick.
Like I wanted to projectile vomit everywhere, pass out, and wake up from what I was hoping was a bad dream. Unfortunately, it was my reality. To make things worse, MANteresting wasn’t even profitable. So while we had a $0 tax obligation, we were being charged $1,950 for not reporting our $0 obligation to the IRS in April. Ugh!
Fortunately, after a bit of internet research I stumbled upon first time penalty abatement. Apparently, the IRS is pretty cool about forgiving fees/penalties for first time offenders. I called some generic 1-800-IRS number and after being on hold for about 40 minutes, spoke to an IRS employee. She pulled up my account and explained why the IRS was charging the penalties.
All I said was “Yeah, I’m an idiot and this is the first time I’ve operated a business, I didn’t realize my personal extension didn’t also cover my business venture.”
To which she literally replied; ” Oh, no problem sir. Give me a few minutes and I’ll have the penalties dropped.”
She put me on hold for about 5 minutes while she did her IRS thing, and then let me know I would be receiving a letter from the IRS indicating MANteresting was in good standing.
It really was that easy. So while taxes are probably my least favorite thing in the world, after Diet Coke, at least dealing with the IRS was surprisingly pleasant. Who woulda thunk it?
You ever dealt with the IRS before?