Dealing with the IRS....UPDATE Page 2

[DWGal210]

I am looking for some input for anyone that has dealt with the IRS.

Today in the mail, I get a letter that tells me I owe $897 to the IRS from my 2007 return. According to them, what my emlpoyer reported and what I reported are off about $3,100. Thus they are saying I owe the feds more $$.

I am going to look at my W2 tonight and double check the numbers - - I am mystified by this. I used Turbo Tax and it was super easy; I had 1 income and a few dividends but nothing fancy (didn't buy a home, didn't have a child, not massive amounts of deductions) so I was very taken aback. The thing is, the numbers are not even close - - at first I wondered if it was a keystroke error when I filed online, but the numbers are not close - $XX,399 and $XX,562 or something close to that.

Luckily at the time, I was employed at my family's business and so I can double-check the numbers with my father and what he has, but I am looking to get this resolved quickly.

I guess my question is - has anyone dealt with the IRS for a matter like this? Were they easy or hard to work with? I will be shocked if this is my error so I am anticipating that I can contest it and have proof that it was not my error. I have until Aug. 16th to get in touch with them and say that I am either paying or disputing.

I am just festering about this. Has anyone had this happen to them?

Thanks!!

 

[DisneyCowgirl]

I have dealt with the IRS with issues before--where I made an error and where they requested additional information. It is nothing to be scared of, but DO respond within the time frame indicated on the letter you got. If you have the documents to support your numbers, I don't think you'll have any problems.

 

[jacos11]

Provide copies of documents supporting your numbers and you will be fine.

 

[niclodn]

Nothing to be worried about. This happened to me last year -- my company's accountant had my W-2's wrong, so they had to re-issue. But they "forgot" to send the correct ones to the IRS Just submit copies of your W-2's, showing what you filed was correct, along with the paperwork and you should be fine.

 

[dturner]

I just went through this with the IRS for my 2007 return also.

Anyway, I filled out something wrong and I also use an online program and my return is fairly simple. Oh, I remember, I didn't know that my employer's contribution into my HSA account needed to count as income on my taxes and I left it out which led me to owe more money.

It was fairly easy to communicate with them - I just re-did my forms and sent them back in and they sent me a correction and once we both agreed the numbers were right I set up a payment plan to pay the excess that I owe.

 

[DWGal210]

I just went through this with the IRS for my 2007 return also.

Anyway, I filled out something wrong and I also use an online program and my return is fairly simple. Oh, I remember, I didn't know that my employer's contribution into my HSA account needed to count as income on my taxes and I left it out which led me to owe more money.

It was fairly easy to communicate with them - I just re-did my forms and sent them back in and they sent me a correction and once we both agreed the numbers were right I set up a payment plan to pay the excess that I owe.

Oh you know what, I wonder if this is it....I did have an HSA. I bet you're right. Oh good grief....I'm glad to hear there is a payment plan, though, if in fact I DO owe them money!

 

[dturner]

Oh you know what, I wonder if this is it....I did have an HSA. I bet you're right. Oh good grief....I'm glad to hear there is a payment plan, though, if in fact I DO owe them money!

They are pretty liberal about the payment plan too - you can choose how much to pay them every month as long as the amount can be paid off within 3years.

 

[DWGal210]

They are pretty liberal about the payment plan too - you can choose how much to pay them every month as long as the amount can be paid off within 3years.

That's good to hear - if I wanted to stretch it to 3 years, as I figure it that would be like $25/month which I can do...it just kills me, though.

 

[Floridagal23]

Yes, and I was also a student attorney in my area's low income tax clinic during my last year of law school. The IRS is actually pretty easy to deal with as long as you follow their letters. If you don't respond when you're supposed to, then..things can get messy pretty quickly.

So, you probably received a notice of deficiency. It should indicate how you need to respond. You should get copies ASAP of your income statements and stubs from that year to show your side of the case. They will be able to tell you what other income (and the source of it) was filed under your social security number and if it is attributed to you, you will owe it. If you owe it (and keep in mind, it's more now because of all of the penalties, etc. associated with it - it could be a way lower amount you were actually off by), then they will work with you to set up a payment plan. If you don't think you owe it (IE, maybe somebody filed your SS number at their work on purpose (ID theft) or someone messed up along the way keying stuff in), then you will need to supply your forms and show that there's no way you could have been working in CA, when you live in NY, etc.

Just be patient. If you have a LITC in your area, you might want to give them a call - they will start their intake for the fall semester cases soon.

 

[pandora174]

That's good to hear - if I wanted to stretch it to 3 years, as I figure it that would be like $25/month which I can do...it just kills me, though.

This happened several years ago to us that we did owe the IRS through a typo on our part. The IRS were very reasonable & I set up a $25 a month payment plan, responded in writing etc. But please note if you are due a tax refund they will use it to pay off the $ due. They forgot to mention that part so when I was expecting X amount I received half. I received then a letter saying I paid in full.

I wasn't upset, glad I was out of that debt but it was a surprise but totally my fault b/c if I'm not wrong when I received the payment plan paperwork there was mention of that. Leason learned as I didn't fully read when I got the letter. Just happy they agreed to a payment plan & the issue was resolved.

Good luck & hopefully everything works out

 

[MinneMickey]

Oh you know what, I wonder if this is it....I did have an HSA. I bet you're right. Oh good grief....I'm glad to hear there is a payment plan, though, if in fact I DO owe them money!

With a possible few exceptions, employer contributions for HSAs are NOT taxed!!! It is treated like health insurance benefits. These are not taxed! At least not yet anyway!!!

One of the exceptions, however, is if your employer exceeds the maximum contribution amount. Or, you are part of an S-Corp. You will have to confirm this yourself.

That being said, I have TWO potentially bad news for you:

1) If in the end, you do owe the Federal Government more taxes, as sure as Disney is powered by Pixie Dust, and if you live in a state with state income tax, you WILL be getting a similar tax bill from your state!

2) Most likely, the IRS computers automatically sent your state that you underpaid taxes for 2007. If you prove to the IRS that you do not owe any additional taxes, the IRS will issue to you what is called an "abatement". They will not issue this to the state. It will still be up to you to "prove" to your state that an "abatement" was issued.

This happened to me almost 20 years ago. In 1990, I got the IRS original notice of not enough taxes paid. It took about a year to "prove" I paid the correct amount. Received my "abatement" in 1991. In 1995, I received notice from my home state about the underpayment -- and even referenced the original IRS notice. I no longer had the "abatement" notice. My state said they would only accept notice from authorized IRS systems anyway. IRS never sent any. I argued, complained and did not pay what I did not owe. In 1996, my state sent my notice to a collections agency. In 1997, my state reduced my refund (basically stole from me) by the amount they wanted. In 2000, collections agency started calling every week now wanting "their" money. That lasted about three months before they stopped calling. Nothing ever appeared on my credit report.

Obvious to me now but save all documentation and take note of all interactions including names and phone numbers.

Sorry for the news...

 

[parkers*momma]

WOW, the IRS must have been busy this week. Our company...a small family business...has 5 employees and today three of us rec'ved letters about our 2007 income tax returns. I immediately called my boss and asked for the remainder of my money. You see, all three of us was reported as making 2-3 times what we actually made. Man, I would have loved to make $50,000 in 2007!

I'm not sure what happened but something got messed up on three of us. Hopefully we can get this sorted out so none of has to pay the supposed back taxes on $20-30,000.

 

[eliza61]

I'm going to ditto a few of the other posters. We owed the IRS 3 grand last year due to some unexpected bonuses (no way complaining) and couldn't pay it off for about 10 months. The agent I spoke with was courteous and helpful, set up a payment plan and entire thing took less then 25 mins. on the phone.

I believe they are working hard at erasing the old image.

 

[Hessie628]

I used to work for a CPA a few years ago and communicated often with the IRS. (I wonder if they still play music from the Nutcracker while on hold ) I will agree that most of the time the problems are easy to deal with as long as you respond within the time frame. If you do owe money, I would ask about lowering the penalties and interest. On a few rare occasions some clients were able to do this (depending on the error.) Given the times I doubt they would waive them, but I don't think it would hurt to ask. Good luck!

 

[Binnie]

The first year I filed with DD as a dependent, I typed her Social Security number in wrong, and got what sounds like a similar notice. I freaked out (of course), so DH called them and all was resolved in no time flat, without any problems. They were very understanding, and the tax liability went away right away.

 

[MickeyEars]

Yes, the IRS will take out what you owe them from any refund you are due. I had just begun paying $100 a month in November toward the $1200 I owed them and come February I was paid in full because they took it all out of my refund. It was quite a surprise because I didn't realize they would do it that way. Thinking back I should have because here's a way for the IRS to get their money all at once instead of waiting on my payments. It had to be paid so there was no need for me to get upset. I'm just glad it's over!!!

Carla

 

[GOOFY4DONALD]

Just another person that has gone through this exact thing. About 7 years ago DH worked for his work though a temp agency. During the year his company hired him and he no longer worked for the temp agency. The temp agency reported that he made 60K while working there are the IRS send us a notice that we owed over 10K. I freaked out. Then I crunched the numbers and found out that the temp agency tripled the amount that DH made, during that time. The temp agency sent the IRS a form and gave us a copy. About 3 months later we get a letter from the IRS that the problem was solved. Most businesses have forms for just this sort of thing.

 

[LadyBeBop]

Standard disclaimer....This message does not represent my employer or the U.S. Government. This is my statement only.

That said...I work for the IRS. This time of year, we send out the notices of unreported income (also known as the CP-2000). This is your first notice. If you don't respond to this notice, we'll send out a notice of deficiency...probably about three months from now. But we'll notify you first before sending the notice of deficiency.

The Underreporters (UR) Branch is easy to work with. (I haven't worked in UR in over 20 years, but I still deal with some of its employees in my work at the IRS). If you can prove that it's not your income, get the paperwork from your employer and send it to the UR. I'd call first to tell them that the paperwork is on its way. There should be a 800 number on your notice.

If it is an error on your part, it's easy to have a payment plan set up. Sounds like the balance due should only be a few hundred dollars, so you should be able to have a plan set up for $25-$50 dollars a month. But as the previous posters say, they'll take it out of next year's refund.

Regarding abatement of penalties and interest....chances are, the IRS might not have figured any penalties. If we did, then you could request an abatement. However, we will not abate interest. The theory is..you had benefit of the extra money for over a year. It's sorta like we lended you the money, and now we want it back with interest.

Let us know what happens, OK? And if you have any questions, PM me.

Oh, and yes, we still play that stupid Nutcracker music.

 

[LKHomemail]

WOW, the IRS must have been busy this week. Our company...a small family business...has 5 employees and today three of us rec'ved letters about our 2007 income tax returns. I immediately called my boss and asked for the remainder of my money. You see, all three of us was reported as making 2-3 times what we actually made. Man, I would have loved to make $50,000 in 2007!

I'm not sure what happened but something got messed up on three of us. Hopefully we can get this sorted out so none of has to pay the supposed back taxes on $20-30,000.

LOL LOL ... a coworker got a notice this last week. She brought an article explaining where all the stimulus money was going. the IRS had been granted more hiring money and ALL the new headcount is for extra collectors. I think the American people can expect that IRS is going to be taking some second and third looks at tax returns to try to generate money. They are having a hard time getting extra taxes passed as people just can't pay and they want that money coming in really bad.

 

[RobinFabulous]

LOL LOL ... a coworker got a notice this last week. She brought an article explaining where all the stimulus money was going. the IRS had been granted more hiring money and ALL the new headcount is for extra collectors. I think the American people can expect that IRS is going to be taking some second and third looks at tax returns to try to generate money. They are having a hard time getting extra taxes passed as people just can't pay and they want that money coming in really bad.

Then they should go after all the people that lie and claim other people's children when they aren't able too