Late Filed Pennsylvania Return -loss of all payments, not just refund?

[sjrcpa]

Woman died in 2017. Son/Executor makes an $7,000 extension payment for her 2017 return on April 15, 2018.

Return filed November 5, 2021. Tax on return $4,000. Overpayment $3,000. I don't know why it was filed late. I picked this up when another employee left.

PA has been sending notices asking for $4,000 plus interest and penalty. I'm thinking they did not credit the extension payment. I get the cancelled check, a POA and finally get someone at PA Dept of Revenue to talk to me.

He said the extension payment was "removed/written off" in May 2021 since it had been 3 years. He said the client does owe the $4K plus the interst and penalty. I can petition the Board of Appeals to get rid of the penalty.

Can this be right? The payment just goes poof? I understand about not getting a refund after 3 years, but I don't understand not getting any credit for the payment.

@PATAX  

@Accountant-Man 

[PATAX]

That does not sound right to me. If a payment was made then it was made period. I have had clients over the years receive notices from Pennsylvania. Sometimes it can be resolved with a phone call if you talk with the right person who understands the situation and can help you. I have a PA tax seminar soon and if I hear anything about this I'll let you know.  I have an erroneous notice right now on my desk from Pennsylvania that I have to respond to.

[sjrcpa]

Thanks.

[TaxGuyBill]

If it was Federal, that would definitely be wrong.

For State, it seems rather illogical and illegal.  However, it is possible that $7000 was 'written off' and sent to the state's Unclaimed Property.  *IF* that is the case, the department of revenue would be correct because they removed the $7000 from their tax system and the $7000 is sitting in the state's Unclaimed Property.  But I do not know the actual rules for PA, so that is just a possible theory.

https://www.patreasury.gov/unclaimed-property/

[PATAX]

You're welcome. I just tried calling five different PA phone numbers in my Rolodex for PA notice of client and could not get through, either no answer or apparently not valid number anymore. I had to send an email and hopefully that works.

[IRonMaN]

I think Bill must be on the right track with unclaimed property but since when does a governmental entity take tax dollars and just say, well, we don't know how much they really owe since they never filed a return so lets just say goodbye to this money?  Either PA has the dumbest people working in their department of revenue or ............................ no there is no "or" on this one.  That is the dumbest thing I have ever seen.

[sjrcpa]

That's a good idea. I'll check.

[BobKamman]

The "or" is, "they elect the dumbest people to the state legislature."