My tax software calculated an estimated underpayment penalty of $77 but did not add it to the total amount due. From the 1040 instructions, pg.77 it says IRS will calculate this for you and send you a bill. My question is what if I don't receive the bill, can I assume everything is ok? Because last year I had an estimated underpayment penalty of $180, but I never received an IRS bill. Bug in the system or something else?
If they don't send you a bill within 3 years, they didn't assess the penalty.
You don't have to worry about it. If you leave the estimated penalty form blank that means you want the IRS to compute it and send you a bill. Actually, it will all be done by computer.
Were you in safe harbor last year (meaning your 2006 year withholding was 110% or 100% of 2005 tax due). Maybe that's why the IRS did not send you a bill.
I am assuming you did not file electronically....as stated by others, you might be in the safe zone, where a penalty may not be due based on the prior year WH & Prepayments VS tax due.
The reason you have not gotten a bill yet (this year), is that your return may not have been -fully- processed yet.
If you filed by paper after using your TAX SOFTWARE and there as a modest tax balance due that you paid in full upon filing, this type of return is the last to get key punched.
Workload priorities dictate that: Returns which are balance due and have a partial or no payment attached are the highest priority for full key punching.
Returns, timely filed with a refund balance, are a priority, as the US Treasury most pay Interest on delayed refunds, to avoid this the IRS makes a strong effort to get these returns posted quickly.
Returns with FULL PAYMENT check attached, only the check is cashed, then the return is set aside for addition data-transcription after the peak workload season has slowed.
Eventually every class of return is keyed in, if the computer thinks a penalty is warrented you will get a bill most commonly by the end of Fall-08, but no later than the statute of limitations 4/15/2011 (1040 for period ending 12/31/2007 filed by or before 4/15/2008.
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