Cp24

[Lion]

When I think I can navigate IRS letters, they change the format. Client faxed over a letter titled We Changed Your Estimated Tax Total. It lists under Tax Statement (is this the IRS statement or as we reported on their tax return?) Estimated Tax Payments of -$55,560.00. On the second page under Change Explanation(s) it says
You claimed an incorrect amount as Estimated Tax payment...(Refer to the following statement of your Estimated Tax Account Credits.) Then, under Statement of Your Estimated Tax Account it lists five payments with Document Locator Numbers and states Total Estimated Tax Credits $55,560.00. [ I confirmed that we reported $55,560.00 on their tax return.] Finally, the letter ends with
Your tax return showed that you wanted $12,178.00 applied to your 2009 Estimated Tax, however, because of the changes explained above, only -$12,178.00 is now available to be applied.

Huh?

Is there no change?
Or a swing from a $12,178.00 refund applied to 2009 ES to -$12,178.00 for a difference of $24,356.00?
Or something else entirely. Those negative signs are freaking me out.

This is the first year that I prepared this return. Their prior year tax return showed a refund applied to their 2008 ES of $11,554.00 which I used. That number is included in the Total Estimated Tax Credits of $55,560.00 and is included on the IRS list with a Document Locator Number.

[Lion]

IRS Says...

I had called the number listed on the IRS letter before posting. She said letter is to report receipt of ES payments. However, letter is very clearly titled We Changed Your Estimated Tax Total. Letter $ equals tax return $. I don't understand what the IRS is reporting. Help.

[BOB W]

The letter appears to be the IRS thinking out loud (on paper). Totally useless to you and your client, but not without taxpayer wondering what you did. We, as tax preparers, do not like to receive some IRS internal thinking expressed on paper to our clients.

NYS sent a simular letter to one of my clients about their 2008 refund that was not rec'd by May 15th. The letter said that no refund was due since it was sent or ready to be sent.
Client wanted to know if the refund was refused.

[OtisMozzetti]

the meaning of negativity

Those negative signs are freaking me out.

It seems to me that the negative signs attached to the total estimated payments made, and attached to the amount applied to next year's tax, signify that "the remaining tax liability went down by that much", or that "the amount available to pay this year's liability went down by that much", or something similar.

If at least the the absolute value amounts are correct totals or correct figures, then we need not freak out concernng the negative signs.

[Lion]

Thanks

Thanks, guys. At least the client who received this letter is a very mellow psychologist. I can't really explain this two-page letter to him, even after asking the IRS what they meant. I'm hoping it's a computer-generated letter triggered by an exact figure (plus or minus less than 50 cents) that doesn't match the figure rounded off to the nearest dollar; but since they do express everything on the letter to .00, that might not be a good guess. I did learn that the amount we expected as an overpayment and asked to be applied to 2009 ES has been applied. Maybe I'll check on it again before the 15 September payment to make sure it has not been removed, because one line of the letter mentions subtracting out $12,178.

I told the client that the amounts in the letter match what we reported on his tax return and that I contacted the IRS who said the $12,178 was applied to his 2009 estimated payments as we requested. Luckily, he's calmer than I am about all this!

[Burke]

Here's what I think happened. The estimated payments were received as reported (including the credit from previous year), the tax return processed, and the overpayment applied to 2009 as requested. THEN someone went in and asked for the letter to be produced. There was nothing there pending under the estimated tax payments, so there was nothing to credit to 2009, as it had all been done previously. Hence, negative figures. They probably just picked the wrong letter. Instead of a CHANGE letter, it should have been an informational one, although I don't think that is their usual practice. I don't get letters confirming a credit to following year as a matter of course. These are form letters that are in a computer, and processors go in and request not only the type of letter, but what paragraphs to include. This is why we get some that don't make any sense. Wrong paragraph picked.

[AuditorTurnedGood]

I spend

a fair amount of time with one client who gets a notice from the IRS every year about changing estimated payments, and therefore refunds/balances due. I've been doing the return for 3 years, and this year, having had enough, I had the client request an account transcript from the IRS for the past 3 years, reconciled my numbers to the client's payments and the resulting bail of IRS documents and notices, then to the IRS' account figures, and filed the return accordingly.

Wait 6 weeks. Client calls me to tell me she - suprise - got a letter telling her to expect a check, and live in boyfriend (whose return I also do) got a letter stating he owed in. All based on estimates. I'm at a loss.

[JG EA]

For some clients that never are good about recording ES tax payments and dates, it is best to automatically get a POA and get a print out I can rely on from eservices or Tax Practitioner Hotline.

Some get very confused about the January payment especially.

[Lion]

Understand

I understand what Auditor and JG are saying. However, this client had correct amounts, dates for his ES that exactly match what the CP letter lists for ES payments and exactly match what we reported on his return. So, I don't know why the IRS says they are changing the amount of his ES payments.

[JG EA]

To make us look bad?

Maybe they just like sending a letter with the words "changing", "incorrect", or
"examined" on general principles.

[Burke]

Oh, you are right. Their latest fave is that "this error could have been avoided if you had only efiled...." or some such wording, when the error in question (which is theirs) had nothing to do with efiling or paper filing.

[Davc]

Oh, you are right. Their latest fave is that "this error could have been avoided if you had only efiled...." or some such wording, when the error in question (which is theirs) had nothing to do with efiling or paper filing.

I've seen that on a letter regarding a return that was e filed.