Skip to comments.The IRS can do this to you.
Posted on 05/30/2014 4:37:35 AM PDT by Luke21
My wife and I are in our mid fifties. We are grandparents. We have tried to play by the rules. Yesterday, I came home from lunch to find his and her notices in our mailbox from the IRS. The fiends have recalculated our income from a few years back and now suddenly want over 21,000 dollars in fees and penalties. They don't even audit you anymore. They just recalculate and demand payment. This is how they operate.
So if this thing is worked out, we will pay five hundred bucks a month to the IRS for most of our remaining working years, all the while being told we are white privileged to work and be slaves. And there is nothing to stop them from doing it again and again to me or to you. This government is truly monstrous.
I am sorry. Do you have a tax preparer or accountant who can help you?
Have you talked to a tax attorney? I think they make it a point to target conservatives.
All the people who were so thrilled with Ubamacare will get what’s coming to them... straight from Uncle Sam.
They still have to audit you unless you just made a math mistake.
“Recalculate our income”
Income isn’t a calculation. It is what it is. Did you under report income or not? Did you take deductions you weren’t eligible for? If you did not, get a tax lawyer and prove it.
If you did under report, you got caught and need to pay. Pretty simple.
On what basis did they do that ?
In my situation, I had rolled over about $30,000 from an IRA into a company-sponsored retirement account. When this happens, the firm that administers the IRA is required by law to file a form with the IRS telling them that they paid out a distribution to one of their customers. This form includes all relevant information related to the taxpayer (me, in this case), including SS#, etc.
Because my $30,000 was being rolled over into a qualified retirement account there shouldn't have been any tax consequences, but it wasn't documented correctly on my tax return so my file got flagged in a routine check (probably done by computer) -- showing a $30,000 distribution to me and no rollover. So the IRS thought I was on the hook for income taxes on the $30,000 plus a 10% early withdrawal penalty (due to my age), plus penalties and interest.
In response to the initial letter from the IRS demanding payment or setting up a payment plan, I sent a letter back to the IRS explaining this, along with records showing the withdrawal from the IRA on one day and the exact same amount deposited in my company 401(k) account two days later. Within a couple of weeks the IRS sent a letter back to me telling me not to do anything or send any payments.
About a month after that, the IRS sent a final letter telling me that they had corrected my tax return and that I did not owe them a penny.
Get a tax attorney.
I’ve been through this and the attorney was able to get a $35k bill down to $5k - including fee’s, penalties, interest, and his fee.
You need a tax attorney, preferably a conservative one.
Do not wait.
yup- I fly a gadsen flag from a flag pole in my yard, constantly confront my demokrat congresswoman (nita lowey) and received a letter from NY State they were auditing me...
are you from California? my buddy from there received the same exact letter stating he owed $24K- he found the small print stating you could fight the amount owed if you had proper documentation...look hard at the letter as he said its in tiny print...
They did and he did. They ended up owing him about $50. I asked him "Didn't you lose more than $50 over the years by foregoing deductions to which you were entitled?"
He told me he probably did, but that wasn't the point. The point was to make one of their greedy agents go home owing him money at the end of the day. He did and they never bothered him with an audit again.
Now, they avoid such face to face contact just by arbitrary recalculations. In my case, every refund except one over the last 10 years has been whittled away by about $200 even though I've used a highly acclaimed tax software program to prepare everything.
It is bullsh*t and I, and the IRS, knows it. But they also know few people will fight them over $200.
This man has a sum well worth fighting them for; it would be worth his while to at least call one of those tax services which advertise on Hannity and other shows.
There are companies that can help you. I hear some advertise on the radio locally. They will negotiate a settlement which will usually be a fraction of the cost and well worth their fees.
The harsh penalties and fees are to get your attention. If they get many of these waived, you can simply pay off the balance owed. Secondly, find out exactly what was recalculated since they might be in error about this and you could have the entire judgement dropped.
If you really owe the money, pay it. But if this is truly fees and penalties, they can be reduced.
There is a “One Time Forgiveness” that the IRS offers. One reason you see TV ads saying if you owe the IRS they will slash what you owe.
I have gotten dunned for 1099s that were actually in my business Schedule C but IRS was looking for them in my individual income. Wrote a letter, they went away.
Demand reasoning, support for their claim....and move all your money out of your bank accounts as the IRS will seize it without warning. If they continue, engage a registered agent to contest their claim.
If you did under report, you got caught and need to pay. Pretty simple.
Not only are you wrong, you MUST CHANGE YOUR SCREEN NAME because no one who understands what it means to be conservative would rattle off such nonsense. Income is not a calculation? Eligible deductions? Prove your innocence? You're insane.
If the givernment can tax something you own then...
YOU DON’T OWN IT.. they do..
Amazing how many cannot figure this out by themselves..
Quite literally do not care -OR- likes being a Judas Goat..
It's helpful for taxpayers to know what kind of formal documentation is sent to the IRS from third parties like vendors, clients, etc. that needs to cross-check correctly with your own tax return. If you earn $1,000 in interest in a bank account, for example, and forget to report it IRS, the income is reported to the IRS through a 1099-INT form that's been filed by the bank. The IRS will cross-check these different forms against each other and flag any discrepancies. There are probably hundreds of thousands of cases like this every year.
Please follow Alberta’s advice.
Many at IRS are incompetent.
They just put lien on my brother’s house because they couldn’t be bothered to turn the page showing where he’d already paid taxes on stock options that he’d exercised.
It's worth noting that in my case there was no incompetence on the part of the IRS. The incompetence was on the part of the taxpayer (me). LOL.
Absolutely. We were hassled in a like manner a few years ago. They claimed we owed them $75,000. We engaged them and eventually won because they were wrong. It took over a year and a half, and it was not fun.
In our case, and we can't prove this, we think we were harassed for our donations.
I can't speak to your case but don't simply accept what they are saying, check to see what their claims are, check carefully and see if they are correct, there are ways for you to overcome this, just don't allow them to run you rough shod into the ground.
I got one of the same two years ago. It aid I owed an additional $1100 or so. I just paid the crooks because it wasn’t worth trying to reason with criminals.
Great thread. Much good advice and first-hand knowledge.
DISMANTLE the gestapo and much more of FEDGOV.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
Thanks for posting your predicament, Luke21. Keep us informed.
I’d see a tax lawyer ASAP.
That’s what your accountant is for. I used to routinely get those recalculation letters. I just faxed then to my CPA and he took care of it.
Send them a letter saying you have been contacted by a fraudulent party demanding you pay money. Tell them you don’t owe them anything and you think someone is using making false letters trying to rob you of money. Send this by certified mail.
This should give you a few months to lawyer/accountant up and figure out what the hell went wrong. I, personally, have been sent letters by fraudsters saying I owe them back taxes - I contacted the IRS and they said yes, it was fraud and I have filed correctly every year.
They do this to my wife and I every year. Criminal organization. We have a CPA who does my business and personal taxes.
If your original return was prepared by an accountant, go back to that accountant and review the IRS letter with them. A good accountant will find the mistake right away.
If you prepared your return yourself, find an accountant, collect your return and supporting documentation, and take it all to him/her. Tell them your story up front, and ask if they have any experience in dealing with the IRS, for other people in your situation. If they don't, I suggest moving on to another accountant -- you don't want someone inexperienced.
Tax attorneys are expensive, so I don't recommend one unless you confirm you really do owe the money. Then, you can have them negotiate with the IRS. Just forgiving any accumulated penalties would substantially reduce what you owe.
IMO #1) you shouldn't panic...#2) contact a CPA...if not a tax lawyer.
You received a cp2000 letter. It is a desk audit. Most that I see from non-clients are wrong. Many are from stock or bond sales. Have pro look at it.
Be careful with dates, you may have to file tax court petition
This sort of thing is far more likely if you’re a sole proprietor or own a business. Even more so if you fall behind in filing your returns. If there’s a letter regarding intent to garnish or levy with a tight deadline, you’ll likely have to pay or agree to a payment plan under protest to avoid attachment, lien or seizure. My business went downhill and I shut it down in 2008, keeping the corporation active in the hopes of getting started again at some point. I got a letter from the state re-estimating my income for that year based upon prior years. I paid it, had no real option at that point, and I’m still trying to get it back. It was not owed under any scenario. There was a loss for the year and a big one no matter how you slice it, that’s why I shut it down. Should have dissolved the corporation in hindsight.
Was this incident pre-Obama or after he was "elected"?
Liquidate and move to Uruguay, IRS can’t reach into that country.
First, some bona fides, I am an Enrolled Agent (EA) and thus can say that I do know some tax knowledge. From what has been said, it appears that you have received a CP2000 “Demand Letter” for a filed tax return that the IRS COMPUTER thinks is in error. In most cases, at this point, no human being has actually done a single thing with your case.
The first thing YOU should do is to see what tax year is being questioned, pull that return from your files and try to go to where the IRS computer says that there is an error. If you can see an error, then does it match you or the IRS? If it is against you, then my best suggestion is to contact a Tax professional. Many times we find that by looking at the tax return as a new one, we can find offsetting claims to reduce the damage. Then follow the guidance and see if you can get the best treatment of a valid debt. Do not procrastinate, you need to do this within the time frame specified in the letter, at least to notify the IRS that you are “in work” on the problem.
If on the other hand, it is an IRS error or misunderstanding and you have the records to prove it, check to see if there is a local IRS office that you can go to. If you can prove it to them, they should be able to resolve it right there. Or you can go to a paid tax preparer route and have them be your contact for the IRS. For them to be legally bound to your interest, they should be an EA, a CPA or a Lawyer. Like above you need to get this underway quickly to stop further IRS letters.
I got a $10,000 dollar bill from the IRS earlier this year. Either the mistake is theirs and you should contest or the mistake is yours and you pay. It really is a binary solution set.
In my case, I was misinformed about the tax law and I had to write a very painful check, then I wrote another one to the state, hoping to avoid penalties and interest with them.
I haven't done a tax return as a paid preparer for four years...don't miss it one iota.
LOL...I earned my own letter last year. In my haste, I didn't correct the entry for my son's SS #, and they caught it. I made the correction, sent them a revised return, and that was that.
Turns out for 'other income' the IRS-trained tax preparer had used the word "Fiduciary" for the fee I charged my late parents estate as Trustee.
I wrote 'em back explaining that I'm not a professional fiduciary - one shot deal since the parents only died once. Got a clearance letter and a check back within a few weeks......but indeed it was better to pay them upfront, and then dispute it.
I never got an explanation for mine, but I didn’t push it either.
And look what we get from our government, if they were a business I would refuse payment for their crappie work.
I have a question. Is it harder for the IRS to audit you, if you send in a paper tax return versus a online? I would think it would be much easier for them to audit you if it is sent online , as the computer can more readily flag errors. A human being would have to personally look through it themselves if a paper return was mailed to them.
I had this happen to me a few years ago. I got a letter that I owed more than 200K I called my accountant very worried. I always give the government their due.
He explained that these initial letters come out of machines and the machine did not pick up a real estate transaction. So he wrote letters and told me not to panic. Took almost a year of letter writing before things were cleared up and I got the letter that said I owed zero. That was a relief.
So get to a good accountant if you don’t already have one.
Thanks for your support. We all know the IRS is wonderful.
Paper returns are scanned anyway, and OCR is used to convert the numbers on the return into a digital form.
Scanning can introduce errors, so you are more likely to encounter an audit for that reason.
However, it does take time for them to scan it. The clock starts ticking as soon as you file it.
“recalculated our income from a few years back”
No details provided. About fifteen words total.
IF you only worked on a W-2 basis, you can fight this quite easily.
There is a very good chance that someone stole your ID & was working under your name & SS number. IF so, you can demand that records from the ‘employer’ be produced.
A similar problem cropped up in N Nevada a few years back. A lady who had worked for the same construction contractor employer for many years got such a notice. When she refused to back down & pay the IRS, it turned out that a Reno McDonald’s owner had a large number of illegals on his payroll & her stolen ID was just the tip of the iceberg.
A raid during only ONE of 3 shifts at his multiple McDonald’s locations produced 63 illegals. He was fined over a million dollars for such shenanigans.
This year, a good friend received a 1099 from a company she worked for OVER 16 years ago. Shen then saw single & lived at a different address. This 1099 came to her under her current married name & at her current married address. She hasn’t worked for anyone in most of those years, as she is raising a family. I don’t know the current status of her 1099 problem for 2013, which is totally bogus, but I gave her the best advice I could. I said to GO IN PERSON to the local IRS & tell them what she knew. I advised her AGAINST going to the company which issued the 1099, since her bogus info could be part of a MUCH larger problem & fraud. I had forgotten about this bogus data, and will try to update myself as to her current status with the IRS.
I am a life long bookkeeper. DO NOT buckle & pay these demands from the IRS. This could be a much larger problem & multiple instances of ID fraud could be behind all of this. Some employers are guilt of this fraud. Some employers get fooled by very good forgeries of ID.
Good Luck—but fight this. It is another part of the dramatic number of illegals who are in the USA.
Get a very good accountant in your area & fight.
Thanks for the encouragement. That is definitely something I’ll look into.
No and, as another post has said, the process of conversion into computer data can unnecessary errors. in previous days there were hundreds of human operators sitting in front of various types of data conversion machines to put an individual tax return into machine-usable form.
Now it is mainly OCR and the like unless the writing (and I have seen some of these) is so bad as to seem deliberate to make trouble. THESE would be ones to provoke CLOSE examination I would guess. "Poking a stick at a tiger!"
Do not send them a dime. Read the letter VERY carefully. It should outline why they think you owe more. In our case it turned out that the debt on a credit card that was opened in our name (Stolen identity a few years back) had been written off. They had BTW sent the notice letter to the thief rather then to us. This raised our income by the forgiven amount and lowered all our deductions.
It took slightly over two years of sending papers back and forth. But things got squared away. We did not own anything because it was not our debt that was forgiven.
Before you make the first call though get a note book and log down every move you make on this issue. Who you talked to, when you talked to them, who you were transferred to, (this may happen numerous times). Get their name and title and write it all down.