990 Mess

[KBTS]

I'll try to present the short version of this story:

New 501c3 client came to see me in early January. IRS has issued intent to levy notice due to late filing of 12/31/06 Form 990 return. Previous preparer failed to mark the box indicating Schedule B (schedule of contributors) was not required and instead included a blank Sch B with the return. IRS kept sending letters stating return was incomplete and client passed these on to preparer. Preparer responded to letters by continuing to send blank Sch B's. I couldn't get a straight answer how, but it seems the IRS finally accepted the return, but issued a fine for late filing to the tune of over $4,000.

I spoke to collections and they agreed to place a hold until 2/16/09 while this got resolved. I sent a letter to the EO Accounts division explaining what happened on January 12 and asked for penalties to be abated (did I mention they did the same thing on the 2007 return). I called yesterday, and they have the letter but it is not assigned to anyone right now. I spoke to collections again and they extended the hold until 3/9/09 but stated "that's all the later we can go, no more."

Besides continuing to call the Tax Exempt Hotline every couple of days to see if they have the letter and hoping this gets resolved in time, is there any other options I could try. How about the Taxpayer Advocate Service?

Thanks for any help you can provide.

[DaveO]

If you go 30 days without contact then you can take it to the advocates office. Otherwise you might try an appeals conference. I had a 990 with this problem a couple years ago and I wrote a letter asking that they abate the penalty due to the fact they prepared their own return and didn't know what was going on. Now that they had professional help (me) that wouldn't happen again. I went on to explain they were all volunteers without accounting or tax backgrounds and a penalty of this size would have an adverse impact on their charitable mission. The penalty was abated after the second try.

[Black Bart]

TA Service

Besides continuing to call the Tax Exempt Hotline every couple of days to see if they have the letter and hoping this gets resolved in time, is there any other options I could try. How about the Taxpayer Advocate Service?

I'd definitely give them a shot (877-777-4778). I've used them twice -- one time the rep was worthless but the other gave incredible service going above and beyond in straightening out a huge mess for my client.

Try calling immediately 'cause, although they want you to have tried all regular IRS channels before involving TA, I told them I'd tried everything and everybody for a long time with no results and they didn't ask me a specific number of days I'd been working it. They just took the information and started. The "good" one called me every now and then with updates on how it was going. And the other one...well...I had an idea how that was going to work out just by the tone of her voice.