HELP Letter from Irs!

[heartsy77]

Ok I got a letter from the IRS today saying we owe roughly $3000.00! from our 2008 return! I used turbo tax but purchased audit protection.

They say there is a discrepancy in the tax withhold of my husband's mutual fund that we liquidated! I took the figure from the original paper work from the distribution and called sf bank to confirm numbers when I filed.

So my question is this if it was filled out wrong on the forms am I still at fault and will I have to pay or will the audit plan take car of it?

 

[vicki_c]

I would check the audit protection agreement info that you paid for. But my guess is, if YOU entered the number incorrectly, you are at fault and wouldn't be covered. I think those protection plans are meant for when the software doesn't do the calculations correctly, or gives you bad results. It assumes you put the right data in in the first place.

 

[Justsyd2]

Have you read what the audit protection covers? It's always been my understanding that you are responsible for the numbers, and the software is responsible if it adds it up incorrectly.

 

[BrettS]

Unfortunately, if the numbers you entered were incorrect (even if you had a form from sf bank with them on it) then you'll owe the taxes. Most likely sf bank filed corrected paperwork with the IRS (you should have gotten a copy as well) once they realized their mistake and that's what triggered this. Technically once you got the corrected paperwork from sf bank you should have filed an ammended return and paid the extra tax at that point.

If you never did get a corrected from from sf bank then you might be able to go after them for any interest the IRS has charged you since you had no way of knowing that they made a mistake, but you would still be responsible for the extra tax.

Certainly verify that the corrected numbers are in fact, correct, but if they are, then I'm afraid you may owe that money. The audit protection won't pay the money for you, but it might not hurt to give them a call and see if they can help verify all the numbers and such.

 

[Cheshire Figment]

First thing is to contact IRS and tell them you are looking into the matter.

Second is to look at Form 1099-R that was provided by the bank and compare the numbers on that form with what was put into TurboTax. It is the 1099-R that is what is reported to IRS, not what was on the papers when the account was closed.

And I don't know what TTs guarantee is. However the guarantee I provide to my clients is I will work with them and IRS to resolve any differences, and, if they owe IRS due to my error (and my guarantee is the same used by other professional preparers and probably by TurboTax) they still owe any actual tax, but I will pick up any interest and penalties. And whether IRS is right or wrong, and whether it wasmy error or the clients, I do not charge anything for the representation.

Look at what was entered on the 1099-R worksheet in TT and see if it compares to what was actually on the 1099-R.

If you want to be more specific, or would like me toi call you to discuss this, send me a PM.

Mike (CPA, Retired but still doing taxes professionally)

 

[deerhart]

Or perhaps the IRS screwed up!

We liquidated a 401(k) a few years ago and the bank sent the 1099 late (I got it in mid march, we filed taxes at the beginning of february.. completely forgot about the liquidation).

I filed and amended 1040-x claiming the 401(k), AND showing the taxes that were withheld from the payment. This resulted in NO CHANGE in my refund.

The IRS then sent me a bill in the amount of the taxes that had already been withheld.

Took me just a phone call, talking to an IRS agent asking where they got the number from. They explained it was for taxes. I explained that the 1099 showed this amount was withheld, they pulled the file, saw that it was, and it was their mistake as they missed that the taxes had already been paid.

 

[amamax2]

We had somthing similar to what happend to deerhart, but with a stock option. We called the brokerage, got out all our paperwork and confirmed all the numbers.

Then we called the IRS and the agent was as nice as can be, pulled the paperwork, saw that everything was as it should be, fixed their end, and sent us out a letter, all within the scope of that phone call.

It was scary calling them, but honestly, they were great.

So call them first, before you panic, and explain it all.

 

[PigletsMommy]

Or perhaps the IRS screwed up!

We liquidated a 401(k) a few years ago and the bank sent the 1099 late (I got it in mid march, we filed taxes at the beginning of february.. completely forgot about the liquidation).

I filed and amended 1040-x claiming the 401(k), AND showing the taxes that were withheld from the payment. This resulted in NO CHANGE in my refund.

The IRS then sent me a bill in the amount of the taxes that had already been withheld.

Took me just a phone call, talking to an IRS agent asking where they got the number from. They explained it was for taxes. I explained that the 1099 showed this amount was withheld, they pulled the file, saw that it was, and it was their mistake as they missed that the taxes had already been paid.

This is kind of the same issue I am having with the IRS right now. I also received a letter regarding my 2008 taxes this past week. They are saying I owe them almost $1500. I received short term disability in 2008 and it is marked as non-taxable income on my W2. I know I filed all this so I'm sure its a mistake on their part, or the part on the insurance company who sent the IRS the W2.

OP there should be a form you received with 3 options. 1 option is to agree with their findings and pay the amount. The next is to disagree with a portion of their findings, and the 3rd option is to disagree with all the findings. You need to do the research to find out where the mistake was made, theirs or yours, call them if you have questions, and send the paper work back asap. If you disagree, then you need to let them know why you disagree and send them copies of the paperwork to back it up. There is a date on the letter you need to respond by... mind is like June 2.

Also, I don't know about your area, but they are having some type of "open house" for questions like this for the next few Saturdays here. You can go to the IRS website to find their locations and it should tell you, that way you can also take your paperwork and ask questions face to face.

 

[SunnieRN]

First thing is to contact IRS and tell them you are looking into the matter.

Second is to look at Form 1099-R that was provided by the bank and compare the numbers on that form with what was put into TurboTax. It is the 1099-R that is what is reported to IRS, not what was on the papers when the account was closed.

And I don't know what TTs guarantee is. However the guarantee I provide to my clients is I will work with them and IRS to resolve any differences, and, if they owe IRS due to my error (and my guarantee is the same used by other professional preparers and probably by TurboTax) they still owe any actual tax, but I will pick up any interest and penalties. And whether IRS is right or wrong, and whether it wasmy error or the clients, I do not charge anything for the representation.

Look at what was entered on the 1099-R worksheet in TT and see if it compares to what was actually on the 1099-R.

If you want to be more specific, or would like me toi call you to discuss this, send me a PM.

Mike (CPA, Retired but still doing taxes professionally)

Just had to jump in to say that I was impressed by your offer to the OP. Very sweet!!

 

[heartsy77]

Ok I have called the audit protection plan to open a case. They told me they handle evrything. And to fax them the IRS letter. I was also told they will call it's and we don't contact the IRS ourselves? I haven't had a chance to pull the paper work yet but I will tonight.

 

[mom4scrapbooking]

I have to say this happened to us too. The tax auditors we payed started some of it and we still owed the irs when it was all done. It was state we owed not federal. We ended up hiring an attorney and went to court. THe irs still won and we paid more to everyone than it was worth. We had to pay the taxes plus interest and penalties.... Funny thing is all our forms were correct too.

 

[DisneyMomma81]

Call the IRS yourself ~ I'm an IRS employee *Power of Attorney* we are not bad people, I *give* POA to those companies you see on TV ~ they are all a scam, I also *give* POA to good companies/people and anything they could do for you you can do yourself and not have to pay someone else. Our *mine and my ex's* 1040 several years ago had a problem ~ it was our fault, we failed to record one of his W2s ~ he had joined the military that year and he got a couple W2s - they refunded us too much, we paid it back.

 

[vicki_c]

Call the IRS yourself ~ I'm an IRS employee *Power of Attorney* we are not bad people, I *give* POA to those companies you see on TV ~ they are all a scam, I also *give* POA to good companies/people and anything they could do for you you can do yourself and not have to pay someone else.

What is that rant about? The OP has already paid for the audit protection offered by her tax program. She's just taking advantage of what she has already paid for. She's not paying anyone to get involved.

 

[Redwolf8812]

Whether or not you give someone permission (power of attorney) to handle the matter for you, keep on top of it. I've known financial representatives to drop the ball, causing additional penalties and interest to be assessed against the tax, and even liens against the taxpayer. The responsibility ultimately lies with you.

If you do end up owing the $, consider requesting an abatement of penalties and interest, and/or a payment plan.

 

[seasheller]

We also received an IRS notice a few years back stating our return was wrong and we owed more. Turns out our bank caused the error. We had cashed several savings bonds during the year. When they issued the 1099-R, I knew the amount was wrong and called the bank to request the right amount on the form. They issued a corrected 1099-R, but didn't MARK it a corrected form - something I missed when doing the taxes. So the IRS thought we got almost double of what we had reported. So, like you, we panicked at first, but then did some checking, and all turned out fine.

 

[Gr8t Fan]

We got a similar notice from the IRS about our 2008 return but they claim we owe almost $44,000 from an IRA rollover. I used TaxAct and did designate the rollover on the return, but apparently it was supposed to trigger a schedule to be added to the return and it didn't. I faxed a letter and the rollover paperwork to the IRS and received a letter telling me that got the information and would be contacting me with a decision. It's a little unsettling to have this hanging over my head, but I did not take the IRA funds and definitely rolled them over, so I'm hoping it all works out in the end.