I believe I failed to correctly file an 83(b) election withing 30 days, but it was accidentally claimed on my 2014 return. I currently owe tax plus penalties and interest on this return because I was not aware that the IRS never debited the funds from my bank despite providing ACH info. I never received IRS notification through the mail or by phone - I lived abroad and simply never received anything to my residence or phone number which was on my returns.
I would now like to amend my 2014 return to remote the 83(b) election and the income derived from the value of the restricted stock award.
Will my tax bill be reduced along with penalties and interest? (for the amount related to the 83b election)
Also, am I a candidate for abatement?
Just to clarify: You did NOT file an 83(b) election, but you DID claim the value of restricted stock at time of grant on your 2014 tax return. And you thought you had timely paid your 2014 tax, but the payment never went through.
You now have two issues: There are penalties and interest related to the late payment. You would like to amend your return to NOT claim the restricted stock.
If you call and speak to an IRS representative, they should be able to waive the late payment penalty if your previous 3 years were paid on time. Ask for the first time abatement. They probably will not waive the interest, though, since you had the use of the money. Explain that you also need to amend your return because you accidentally claimed income you should not have. Ask what to do about interest.
If they tell you to wait for the amendment to go through and then pay recalculated interest, make sure you follow up on that -- I had a client in a similar situation and IRS never sent a revised bill for interest (even though they said they would). Eventually the computerized collections system sent another nasty-gram.
If you need help with it, I encourage you to find an Enrolled Agent in your area. There are some excellent tax pros in Bend.
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