IRS Frustrations (a rant)

[soccerdad72]

I know that there was a bill passed in order to, in part, update the IRS' antiquated systems. Clearly, those funds haven't been either received or utilized yet.

Note: I'm not intending for this to get political

My rant from today's interaction with the IRS...

So, a couple weeks ago, we get a letter from the IRS saying we've overpaid and they will credit our future return for the amount of that overpayment. We pretty much blew it off, because according to all our records, they were wrong and we paid what we owed. We pay quarterly estimated taxes and the amount they were saying was one of those payments. Our taxes are very complicated, but they're processed by my wife's tax department, so we trust they're done accurately.

Fast forward to yesterday when we received another letter from the IRS. This one said that we had an underpayment of taxes and we owe all that plus a whole bunch of penalties and taxes. So, basically, the payment we made didn't get credited to our account and thus they're saying we underpaid our taxes. Not to mention, the bulk of the penalties were listed as 'failure to file tax return'.

All we got was a phone number to call. Tried it yesterday, got an automated message saying due to call volume they can't take our call, and it hung up. Called again this morning, hung up on again. Called back and finally (after an endless string of numbers entered into the phone) got a human being. After trying to explain everything to that person, not only did we not get a resolution, but we also come to find out that something in Tax Year 2021 created a "freeze" on our account and an additional amount of funds that we had in excess which nobody had notified us about. At one point, the person we were talking to said that they were going to use those frozen funds to pay the penalties and interest for us. Uh, no, we don't owe those penalties and interest at all, so you can't use our other excess funds to pay anything right now.

That comment apparently got us put back on hold and transferred randomly to another person, who had no idea why the call was transferred to him and had nothing to do with our issue at hand, but would see if he could help us. After waiting on hold again (it's 2 1/2 hours into this call by now), this guy tells us another letter is coming to us in the middle of October saying that there is no balance due in our 2022 and 2023 tax years - no idea what's going on with these extra funds from 2021, but we figured we at least got any underpayment issues. I figure we can deal with the 2021 funds once we get that confirmed. I can only imagine how many hours that will take.

 

[sam_gordon]

I know that there was a bill passed in order to, in part, update the IRS' antiquated systems. Clearly, those funds haven't been either received or utilized yet.

Note: I'm not intending for this to get political

My rant from today's interaction with the IRS...

So, a couple weeks ago, we get a letter from the IRS saying we've overpaid and they will credit our future return for the amount of that overpayment. We pretty much blew it off, because according to all our records, they were wrong and we paid what we owed. We pay quarterly estimated taxes and the amount they were saying was one of those payments. Our taxes are very complicated, but they're processed by my wife's tax department, so we trust they're done accurately.

Fast forward to yesterday when we received another letter from the IRS. This one said that we had an underpayment of taxes and we owe all that plus a whole bunch of penalties and taxes. So, basically, the payment we made didn't get credited to our account and thus they're saying we underpaid our taxes. Not to mention, the bulk of the penalties were listed as 'failure to file tax return'.

All we got was a phone number to call. Tried it yesterday, got an automated message saying due to call volume they can't take our call, and it hung up. Called again this morning, hung up on again. Called back and finally (after an endless string of numbers entered into the phone) got a human being. After trying to explain everything to that person, not only did we not get a resolution, but we also come to find out that something in Tax Year 2021 created a "freeze" on our account and an additional amount of funds that we had in excess which nobody had notified us about. At one point, the person we were talking to said that they were going to use those frozen funds to pay the penalties and interest for us. Uh, no, we don't owe those penalties and interest at all, so you can't use our other excess funds to pay anything right now.

That comment apparently got us put back on hold and transferred randomly to another person, who had no idea why the call was transferred to him and had nothing to do with our issue at hand, but would see if he could help us. After waiting on hold again (it's 2 1/2 hours into this call by now), this guy tells us another letter is coming to us in the middle of October saying that there is no balance due in our 2022 and 2023 tax years - no idea what's going on with these extra funds from 2021, but we figured we at least got any underpayment issues. I figure we can deal with the 2021 funds once we get that confirmed. I can only imagine how many hours that will take.

Yikes! Do you have a nearby IRS office you can go to and actually sit in front of a human? Probably need to make an appointment which would be it's own mess.

 

[kdonnel]

After waiting on hold again (it's 2 1/2 hours into this call by now), this guy tells us another letter is coming to us in the middle of October saying that there is no balance due in our 2022 and 2023 tax years - no idea what's going on with these extra funds from 2021, but we figured we at least got any underpayment issues.

If you have an IRS account you should be able to login and see any notices or letters that have been generated and sent to you. Could be a way to see the letter before it arrives in the mail.

 

[Christine]

I feel your pain. During COVID, we were trying to settle my FIL's estate and he had an overpayment. It was awful and it seemed like every IRS rep just quit their job. Our paperwork we sent in went into some black hole.

It took us the better part of 3 years to resolve it. What we had to do was skip over the regular calls and engage a taxpayer advocate. I was skeptical but they are an independent arm of the IRS, almost like a watchdog/advocacy part and they got it taken care of.

 

[OneOftheB's]

I'm guessing that you did your own taxes? If not, your accountant may be a big help with this. They sometimes have a more direct way to contact the IRS than the general public does.

Hopefully, you will be assigned to a person soon, but if not call your Congressman/woman. They will be able to get you to someone a little farther up the food chain at the IRS via their office's constituent services.

When we had an issue with our taxes several years ago, we called our US Representative and it went from "unassigned" and lingering in an IRS office to resolved within a few days.

 

[longboard55]

I have dealt with the IRS often, yes they are very hard to get a hold of and they are very slow. Like minimum 3 months for any response. My advice, if you can pay what they ask and soon they should send the refund so you are only out interest. but they will pay you interest. I had a situation over $22000, they sent it back to me because it was recorded under the wrong year, then they said I owed so I sent it back. Probably took at least a year. Trying to make any sense of what they are doing is very difficult. Yes they are way understaffed. I once talked to a lady and she said they had warehouses of mail they have not gotten to. Andy trying to get through on the phone is very difficult, try Friday afternoons.

One of the issues I have had in the past is when you mail something back it never goes to the person who raised the question, so you end up with a whole new set of issues.

Not to be political but they are massively understaffed and it is costing this country a lot of money.

 

[sam_gordon]

I'm guessing that you did your own taxes? If not, your accountant may be a big help with this. They sometimes have a more direct way to contact the IRS than the general public does.

From the OP...

Our taxes are very complicated, but they're processed by my wife's tax department, so we trust they're done accurately.

 

[MillauFr]

Not to be political but they are massively understaffed and it is costing this country a lot of money.

Agreed. That and the tax code is far too complex. When you take your tax information to 20 accountants and you get 25 different answers on how much you owe you know there is a problem.

 

[soccerdad72]

If you have an IRS account you should be able to login and see any notices or letters that have been generated and sent to you. Could be a way to see the letter before it arrives in the mail.

Oh yeah, that reminds me of an added level of frustration. Ever since they went to using ID.me, they can't seem to figure out that my wife and I file jointly (and have been for the 27 years we've been married), so when I made an estimated payment, they didn't know where to credit it to, because my wife is listed as the primary taxpayer. So I can go into my IRS account and nothing shows up, but my wife might be getting the notices in her account (I'll have to have her check).

 

[barkley]

I know that there was a bill passed in order to, in part, update the IRS' antiquated systems. Clearly, those funds haven't been either received or utilized yet.

Note: I'm not intending for this to get political

My rant from today's interaction with the IRS...

So, a couple weeks ago, we get a letter from the IRS saying we've overpaid and they will credit our future return for the amount of that overpayment. We pretty much blew it off, because according to all our records, they were wrong and we paid what we owed. We pay quarterly estimated taxes and the amount they were saying was one of those payments. Our taxes are very complicated, but they're processed by my wife's tax department, so we trust they're done accurately.

Fast forward to yesterday when we received another letter from the IRS. This one said that we had an underpayment of taxes and we owe all that plus a whole bunch of penalties and taxes. So, basically, the payment we made didn't get credited to our account and thus they're saying we underpaid our taxes. Not to mention, the bulk of the penalties were listed as 'failure to file tax return'.

All we got was a phone number to call. Tried it yesterday, got an automated message saying due to call volume they can't take our call, and it hung up. Called again this morning, hung up on again. Called back and finally (after an endless string of numbers entered into the phone) got a human being. After trying to explain everything to that person, not only did we not get a resolution, but we also come to find out that something in Tax Year 2021 created a "freeze" on our account and an additional amount of funds that we had in excess which nobody had notified us about. At one point, the person we were talking to said that they were going to use those frozen funds to pay the penalties and interest for us. Uh, no, we don't owe those penalties and interest at all, so you can't use our other excess funds to pay anything right now.

That comment apparently got us put back on hold and transferred randomly to another person, who had no idea why the call was transferred to him and had nothing to do with our issue at hand, but would see if he could help us. After waiting on hold again (it's 2 1/2 hours into this call by now), this guy tells us another letter is coming to us in the middle of October saying that there is no balance due in our 2022 and 2023 tax years - no idea what's going on with these extra funds from 2021, but we figured we at least got any underpayment issues. I figure we can deal with the 2021 funds once we get that confirmed. I can only imagine how many hours that will take.

i'm sorry. it's VERY frustrating. we dealt with an issue that the irs said was an improper deduction causing an underpayment and penalties and interest....our cpa sent a letter explaining the validity of the deduction and even indicated where in the tax code the type of calculation she used was permitted. for 18 months we just got a new letter every 6 weeks or so saying it was 'in review' and we would be notified in 45 days. finaly got reviewed-and again denied (now with more penalties and interest). cpa also taught accounting at the local university so with the next letter she sent a copy of the handout she gave to her freshman students on tax deductions, how to look them up on the irs website AND a photocopy of the irs's own publication on the particular deduction they were saying was not allowed. another 6 months (and more letters) but apparantly whoever reviewed it took the time to read through their own department's attached materials and allowed the deduction/reversed all penalties and interest.

waste of time.

 

[longboard55]

I am telling you, unless it is a huge amount, it is not worth the fight to argue about a penalty. Just pay it. If you pay it the computers square your account and it ends.

 

[LuvOrlando]

Uggh, this stinks and must be so stressful and frustrating.

I would get a CPA that specializes in problems right away to cut through the red tape so you are informed, they can generally call on your behalf and get to the point faster and then you can figure out how to move ahead.

I would never ever wait on this, owing money is criminal so I'd go at that with as many experts as possible immediately because the longer this drags the more expensive it gets to fight it- nipping it in the bud is worth a few hundred to avoid needing a Tax Lawyer.

 

[soccerdad72]

I am telling you, unless it is a huge amount, it is not worth the fight to argue about a penalty. Just pay it. If you pay it the computers square your account and it ends.

The penalty was over $10,000

 

[jalapeno_pretzel]

Not to be political but they are massively understaffed and it is costing this country a lot of money.

Yes, this. And 50% of their workforce is either already retirement age or will be so within the next 5 years.

The number of IRS employees peaked under Reagan at 123,198 employees in 1988.
They currently have 82,990 employees, up from a low of 73,519 in 2018.

In comparison, the population in 1988 was 244.5 million, and today it's 333.3 million. So, they have a lot fewer employees to deal with a lot more people.

Add to that, their software is some of the oldest and most outdated in the federal government, making it vulnerable to errors and hacking.

The GAO estimates over $500 billion in taxes go unpaid annually. That's $$ that could fund any number of things, from deficit reduction to improved natural disaster response and recovery.

I hope OP can get it resolved. Some automated system likely was messed up, or something was entered manually incorrectly. What a pain.

 

[tazdev3225]

I went through this about 20 years ago. We had an accountant do our taxes since my husband had tried to start a small business. It folded within a year but the IRS claimed we owed a quarterly tax and with interest and fees it turned out to be a lot of money. We finally paid it off, or so we thought. We were in the process of refinancing our house since the business almost bankrupted us, when an IRS agent showed up at the door with paperwork saying we still owed all the money plus huge fines and penalties. The IRS docked our returns for a couple of years but applied the payments to the wrong department. The accountant fought with them for years to get it refunded since we had to add the amount they wanted to the refinance of the house.

Good Luck because we never saw a dime of what we paid TWICE, and it was a substantial amount.

 

[tvguy]

I must be missing something. Why isn't your wife's Tax Department handling this?

 

[soccerdad72]

I must be missing something. Why isn't your wife's Tax Department handling this?

It’s not their responsibility.

 

[tvguy]

It’s not their responsibility.

Why wouldn't the entity that prepared the taxes be responsible for defending their work?

 

[soccerdad72]

Why wouldn't the entity that prepared the taxes be responsible for defending their work?

It’s not their work that’s the problem. They gave us the estimated quarterly payments that we should make. We made them, the IRS didn’t allocate them correctly.

 

[DCLMP]

Sorry that sounds worse than dealing with a cell phone provider. I got a headache just reading it.