I went through this exact situation last year and successfully got my Section 6657 penalty removed! The process can be frustrating, but it's definitely doable when you have the right documentation. Here's what I learned from my experience: The IRS is actually pretty reasonable about these penalties when you can clearly demonstrate that the payment failure wasn't due to insufficient funds or negligence on your part. Since you filed on time, had adequate funds, and paid immediately once you discovered the issue, you have a strong case. For the letter itself, keep it professional but straightforward. Start with your identifying information (name, SSN, tax year, CP14 notice number), clearly state that you're requesting abatement of the Section 6657 penalty, and explain that you had sufficient funds when the payment was supposed to process. Include the date your payment was supposed to go through and the date you successfully made the payment once you discovered the issue. The bank statements are crucial - make sure they clearly show your account balance on the date the IRS attempted to process your payment. I'd also recommend including Form 843 (Claim for Refund and Request for Abatement) as the formal mechanism for your request. Regarding payment timing, I'd suggest paying the penalty now to stop interest from accruing. The IRS will refund it with interest if they approve your abatement request. Send everything via certified mail to the address on your CP14 notice. In my case, it took about 7 weeks to get a response, but they completely removed the penalty. Stay patient and persistent - you've got this!

I went through almost the exact same situation about 6 months ago! Got hit with both the failure to pay penalty and the Section 6657 dishonored payment penalty even though I had sufficient funds. It's incredibly frustrating when you know you did everything right. Here's what worked for me: I wrote a straightforward letter explaining that I had adequate funds when the payment was supposed to process, included my bank statements showing the account balance on that specific date, and attached Form 843 for the formal abatement request. The key is being very specific about dates and amounts while keeping the explanation clear and factual. I paid the penalty upfront to stop interest from accumulating (which I'm glad I did since they eventually refunded it), and sent everything via certified mail to the address on my CP14 notice. It took about 8 weeks, but they completely removed the penalty. The most important thing is proving you had sufficient funds and that you acted promptly once you discovered the issue. Since you can demonstrate both of those things, you should have a strong case. Don't get discouraged by the process - the IRS is actually pretty reasonable about these situations when you have proper documentation. You've got this!

For ed-tech companies like Khan Academy, you'll likely want to use SIC code 7372 (Prepackaged Software) as your primary classification, especially if your revenue model is subscription-based software delivery. The key factor is how your business generates revenue - if it's primarily through software licensing/subscriptions, then 7372 is most appropriate. However, I'd strongly recommend also familiarizing yourself with the corresponding NAICS code 511210 (Software Publishers), as most government forms and business registrations now use NAICS instead of SIC. Many banks, investors, and regulatory agencies have transitioned away from SIC codes entirely. One thing to consider is that some states have specific licensing or regulatory requirements for educational service providers, regardless of your delivery method. It's worth checking with your state's business registration office to see if there are any additional requirements for companies providing educational content, even through software platforms. The educational component doesn't necessarily require a separate classification if your primary business activity is software development and distribution - the fact that your software serves an educational purpose doesn't change the fundamental nature of your business model.

I went through this exact same classification dilemma when launching my educational platform last year. After consulting with both a business attorney and my accountant, we settled on SIC 7372 (Prepackaged Software) as the primary code since our core business model is software subscription services. The key insight my attorney shared was to focus on your primary revenue-generating activity rather than just the subject matter of your content. Even though we're in education, we're fundamentally a software company that serves educational markets - similar to how Salesforce is a software company that serves sales teams. One practical tip: when filling out forms, I've found it helpful to have a brief one-sentence explanation ready for why you chose your classification. Something like "Software development and licensing with educational applications" has worked well for me when questions arise about why an education-focused company uses a software classification. Also worth noting that some business insurance policies have different rates based on classification codes, so this choice can have real financial implications beyond just paperwork compliance.

For e-filing Form 1120, I'd recommend FreeTaxUSA Business - they support C-corp filing and are significantly cheaper than most alternatives (around $150-200 vs $600+ for Drake). The interface is pretty intuitive and they have good QuickBooks import functionality. Regarding your shareholder payment situation, you definitely need to get this sorted before filing. Since C-corp shareholders who work in the business are considered employees, those "distributions" should have been processed as payroll with proper withholding. You'll likely need to file corrected payroll returns (941-X) and pay the missed payroll taxes plus penalties. One suggestion - consider consulting with an EA (Enrolled Agent) for just this first year to make sure you get the employment tax issues resolved properly. They're less expensive than CPAs but can represent you before the IRS if needed. Once you get the compliance issues sorted, you can handle future years yourself with the software.

Yes, FreeTaxUSA Business handles the complete e-filing process for Form 1120 - it's not just form preparation. They submit directly to the IRS and you get confirmation when it's accepted. I used them for our C-corp last year and the whole process was smooth. Definitely agree on getting an EA involved for the payroll tax cleanup. We had a similar situation with informal payments to founders, and our EA helped us file the 941-X forms and minimize penalties. The IRS was actually pretty reasonable about it since we were proactive in fixing the issue rather than waiting for them to discover it. One tip - when you do find an EA, make sure they have experience with startup employment tax issues. Some are more focused on individual returns and might not be as familiar with the nuances of C-corp shareholder-employee situations. The right EA can also help you set up proper payroll processes going forward so you don't repeat the same mistakes.

i feel u fam. got one last week and almost had a heart attack but it was just confirming my address change lmaooo

Hey! I totally get the anxiety - IRS letters can be super intimidating even when they're nothing serious. Like others said, you really need to open it to know what's going on. Most of the time it's just routine stuff like confirming info or asking for documentation. The notice number (usually CP### or LTR####) will tell you exactly what type it is. Once you open it, definitely post a pic with your personal info blurred out and we can help you figure out next steps!

Looking at your transcript, I can see why you're stressed - those are some significant adjustments! The key thing to understand is that codes 767 and 765 (your credit reductions totaling $5,080) happened back in April 2024, but your amended return wasn't filed until October 2024. That 6-month gap is likely what triggered the interest charge. The good news is that code 291 showing -$1,848 is actually money being credited back to your account (negative amounts are refunds on IRS transcripts). So while you lost $5,080 in credits, you're getting $1,848 back, making your net loss around $3,232 plus the interest. Since your amended return is still processing (the "forwarded for processing" status), there's still hope that some or all of those original credit reductions could be reversed if the amendment addresses whatever triggered them. The IRS usually reduces EIC when they can't verify income or dependent eligibility, so make sure your amended return includes all supporting documentation. I'd recommend calling the Practitioner Priority Service at 1-866-860-4259 if you can get a tax pro to call for you, or try the Taxpayer Advocate Service at 1-877-777-4778 - they're much better at explaining these complex situations than regular IRS customer service. Keep that reference number 43277-696-04828-4 handy when you call!

The timeline of events on your transcript tells a clear story of what happened. Your original return was processed normally, but then in April 2024 the IRS conducted an automated review that flagged issues with your Earned Income Credit and other credits, leading to those substantial reductions (codes 765 and 767). What likely happened is the IRS couldn't verify information like income amounts, filing status, or dependent eligibility during their post-filing review process. This is pretty common with EIC claims since they're heavily scrutinized due to fraud concerns. The fact that you filed an amended return in October 2024 suggests you discovered what caused the original adjustments and are trying to correct them. The 6-month gap between the credit reductions and your amendment is what generated that interest charge - the IRS considers the credits as "overpaid" from April onward until resolved. Here's what to watch for: Your amended return (reference 43277-696-04828-4) is currently being processed, which typically takes 16-20 weeks. If it successfully addresses the original issues, you could see those credits restored. The code 291 credit of $1,848 might be a partial adjustment while they work through your case. Keep checking your transcript weekly and definitely call the Taxpayer Advocate Service at 1-877-777-4778 - they can provide much clearer explanations than regular IRS phone lines. Stay patient, but stay on top of it!