Dealing with the IRS....UPDATE Page 2

[DisneyGirl@Heart]

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!

Yes, they do!

 

[mumom95]

I dealt with the IRS a few years ago. It was the first time I did my taxes myself (using Turbo Tax) and I didn't report something that needed to be reported (it was an accident, I didn't realize I hadn't reported everything).

When I got the letter I freaked out. I had visions of men in black trenchcoats knocking on my door and taking me away to prison right in front of my kids. When I called the IRS I was a complete wreck. They were so nice and so understanding. They explained very simply the form I needed to fill out and what I needed to do (I owed them about $200 and had no problem paying it in full) and told me not to worry. I was so impressed. They really were the nicest group of people I've ever dealt with in a situation like this. I have no idea why they get a bad wrap sometimes.

 

[sameyeyam]

I am an accountant and one thing that I recommend you do is respond to any and all notices in WRITING. It's ok to call, but even if you speak with them you should send a letter stating what you spoke about on the phone. Also, send it via registered mail with return receipt requested.

It is amazing how many times you can call and they will never had a record of it. But it's hard for them to dispute that you never responded when you have a return receipt stamped by them.

 

[LadyBeBop]

Please read my standard disclaimer above.

When I got the letter I freaked out. I had visions of men in black trenchcoats knocking on my door and taking me away to prison right in front of my kids. When I called the IRS I was a complete wreck. They were so nice and so understanding. They explained very simply the form I needed to fill out and what I needed to do (I owed them about $200 and had no problem paying it in full) and told me not to worry. I was so impressed. They really were the nicest group of people I've ever dealt with in a situation like this. I have no idea why they get a bad wrap sometimes.

Oh, the last thing the IRS wants to do is to pur someone in jail for a honest mistake. We'll bend over backwards to help someone, even if the honest mistake is in the tens of thousands of dollars. Yes, there are taxpayers who underreport their income or overstate their deductions by that much, and we still don't even think about criminal penalties for them. We may ding them for civil penalties. But we would never prosecute, unless the taxpayer knew what he was doing was wrong, and the money amounts are huge.

I am an accountant and one thing that I recommend you do is respond to any and all notices in WRITING. It's ok to call, but even if you speak with them you should send a letter stating what you spoke about on the phone. Also, send it via registered mail with return receipt requested.

It is amazing how many times you can call and they will never had a record of it. But it's hard for them to dispute that you never responded when you have a return receipt stamped by them.

I'll second that. I'd call first, so that the representative can notate in our computer system that you called and that you are sending the information. But I would back everything up in writing. We (as phone representatives) are supposed to document every phone call in our servicewide computer system. However, sometimes we forget. You may call at the end of our shift, we are in a hurry to get home, think that we would document it first thing in the morning but we forget. Or once, a computer failure knocked us completely out of a system while I was documenting a phone conversation. I forgot to write down the access number to get back into her account, so her conversation was undocumented.

One other thing, when corresponding to the IRS. Do not send originals. Send photocopies. Sometimes documents are misrouted, and you may have to send the same document two or even three times. Also, if you are able to fax the documents, do so. That saves a lot of time. However, do so if you can do it cheaply (e.g. if you can fax it from work, or you have a home fax machine). Do not go to Kinkos and spend $3 a page faxing it.

 

[Took]

Please read my standard disclaimer above.



Oh, the last thing the IRS wants to do is to pur someone in jail for a honest mistake. We'll bend over backwards to help someone, even if the honest mistake is in the tens of thousands of dollars. Yes, there are taxpayers who underreport their income or overstate their deductions by that much, and we still don't even think about criminal penalties for them. We may ding them for civil penalties. But we would never prosecute, unless the taxpayer knew what he was doing was wrong, and the money amounts are huge.



I'll second that. I'd call first, so that the representative can notate in our computer system that you called and that you are sending the information. But I would back everything up in writing. We (as phone representatives) are supposed to document every phone call in our servicewide computer system. However, sometimes we forget. You may call at the end of our shift, we are in a hurry to get home, think that we would document it first thing in the morning but we forget. Or once, a computer failure knocked us completely out of a system while I was documenting a phone conversation. I forgot to write down the access number to get back into her account, so her conversation was undocumented.

One other thing, when corresponding to the IRS. Do not send originals. Send photocopies. Sometimes documents are misrouted, and you may have to send the same document two or even three times. Also, if you are able to fax the documents, do so. That saves a lot of time. However, do so if you can do it cheaply (e.g. if you can fax it from work, or you have a home fax machine). Do not go to Kinkos and spend $3 a page faxing it.

All very good advice. We had to deal with the IRS once for a mistake (on our part). We owed several thousand b/c we misunderstood an IRA withdrawal rule. The agents were ALL nice and we decided to settle up right away even though they offered us payment options. I think most at the IRS are helpful and fair.

took

 

[DWGal210]

Thank you, everyone, for the good advice!! I really appreciate it!

I looked at my '07 return last night with my dad, and we THINK we've isolated the problem but he's going to take it to his accountant this morning just to make sure.

I appreciate all the advice - thank you again so much, kind Dis-ers!

 

[DWGal210]

I just wanted to update everyone - thanks again for the good advice!

My dad (who was holding my hand through this ) talked to an accountant yesterday and he was super helpful - turns out that according to the accountant, I shouldn't owe anything to the IRS! It was something where I had to add in my HSA as income, but then I could have deducted it again on the return (and instead of deducting the whole amount, I just did a portion of it for some reason, and didn't initially add it into my gross income).

So thank you again, everyone! I really appreciate it!

 

[TheRustyScupper]

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.

1) First, glad you found the error.
2) Now just supply it, and ask if they want an amended return or if they do it.

3) As for dealing with the IRS, they really are not that bad.
4) I get audited every two years (once they went three years).
5) They MUST tell you what they are auditing.
6) I just put all the paperwork together
. . . I get the receipts
. . . I list them on an Excel spreadsheet
. . . I index them to the spreadsheet
. . . They check one or two randomly from the spreadsheet
. . . They are usually convinced the index is correct and data is present
. . . They conclude the interview
7) If they see you are not trying to fool them, they work with you.
8) There are three people you don't mess with, as they can do you harm
. . . your secretary
. . . your caddy
. . . your IRS auditor

NOTE: Please do not try gimmicks like some books say - like getting the last appointment so they want to get home instead of auditing (they make you come back), or canceling an appointment (that just gets them ticked off).

 

[Cheshire Figment]

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

They do. I remember being at a Federal/State Income Tax Seminar in Maryland the year after the law went into effect requiring all dependent Social Security number on tax returns.

One of the presenters from IRS mentioned that the number of dependents claimed (in total) declined by several million nationwide, that there were close to 100,000 returns where the family lost four or more dependents, and about 12,000 returns where the number of dependents claimed decreased by ten or more. He also said that a lot of audits were being conducted of those people's prior year returns.

Mike (CPA Retired)

 

[Chicago526]

They do. I remember being at a Federal/State Income Tax Seminar in Maryland the year after the law went into effect requiring all dependent Social Security number on tax returns.

One of the presenters from IRS mentioned that the number of dependents claimed (in total) declined by several million nationwide, that there were close to 100,000 returns where the family lost four or more dependents, and about 12,000 returns where the number of dependents claimed decreased by ten or more. He also said that a lot of audits were being conducted of those people's prior year returns.

Mike (CPA Retired)

Oh to have been a fly on the wall during a few of THOSE audits!

 

[Arielle22]

I have handled many tax lien while processing payroll. Never let tax issue get that far.

Once it does, payroll can garnish most of your pay until the lien is paid off. Usually when I tell the employee I received the lien, the employee calls the IRS and works out arrangements.

However unless I get a notice from the IRS to not take the lien (either I get a payment plan or a notice that a payment plan is being worked out) I must take the lien.

Once the employee sees most of their check going to the IRS they are motivated to work on getting a payment plan.