IRS Notices

[S T]

What to do
T/P received a CP 2000 notice for not reporting Capital Gain Dividends on what they thought was a closed account.
I reviewed, and concurred with the IRS - but disagreed with their calculations as they did not consider the Qualified Dividends and Foreign Tax Credit.
we responded with appropriate revised statements, including the form 6251 and the Schedule D calculations. After all of the recalculations we show a tax due of $1,490 - IRS original notice indicated $ 1,592

IRS now sends a revised notice, we agree to the point of the correctd taxable Income, on line 43, but after that I just don't know where they arrived at their figures for the tax. They are decreasing the Alternative minimum Tax and providing a "huge credit", which according to my software calculations is incorrect. I really don't know how the AMT can decrease when in fact we had an increase in taxable income??

Now the IRS is showing an additional refund of $676- when in fact there should be the amount due of $1,490.

What is the proper method to handle? - Do I resubmit to them trying to point out the error in their calculations - or just let the taxpayer sign in agreement with their findings?
For me, I say I have to point out the error, but wonder what others think in this situation.

Sandy

[GTS1101]

IRS Notices

Hi Sandy,

I had a similar situation with a client and the earned income credit. He was a pastor and they calculated a much bigger EIC than the software calculated. I also prepared by hand to verify that the software was correct. I advised the client that we write a letter to the IRS asking them to explain how they calculated the refund. I explained in the letter that my client did not want to have to pay back this additional refund in future years if the IRS realized their error down the road. I would always want to point out the error and have it done correctly. Sometimes the client may not want to do that but if they want the extra money that they are not sure is due to them I would make it clear in writing that you warned them they may have to pay it back. It is just like if the bank put 10,000 in your account and it wasn't yours would you tell the bank or keep it and give to them if they ever ask for it. I would give it back to the bank. It is not my money. Just as that refund is not theirs if the IRS made a calculation error that refund is not the client's. Hope some of this might help.

GTS1101

[geekgirldany]

I had a customer that was being mail audited. The change they came back with did not take into consideration information the taxpayer had sent to backup a deduction. The client did owe some but not what they were purposing. After nearly a year and getting invovled with the Taxpayer Advocate Service... the audit was dropped completely with no change. Customer did actually owe some but they did a no change on it and cleared off what they said she owed. I left it.

You might want to get the TAS invovled if you have been dealing with it for awhile. I could not work with the mail audit division so I had to get TAS involved.

[S T]

Thank you

Thanks GTS and Dany,

Good advice, just lose sight of what to do, when IRS "ignores" what you sent in and changes an amount due to a refund. I am use to the opposite response of "more" due, not a refund!

This one is so bizarre - so - moving forward, trying to correct IRS' incorrect correction notice. Client is also okay with that.

On another note, I had a "wonderful" experience yesterday with an IRS Rep with a missing estimated tax payment. This IRS rep went the extra mile, and as I had all of the information from the tax client, such as Bank info, routing number, date, amount, etc - SHE FOUND IT and could apply it to the taxpayer's account without waiting for a copy of the front/back of check from the bank. So I received "my angel reward" from the Client for going the extra mile, with the assistance of the IRS rep. The payment was sitting in "lala land". That was a first for me.

Thanks

Sandy

[Davc]

The payment was sitting in "lala land".
Sandy

You just screwed up Health Care Reform funding. "lala land" was where they were planning on getting the cash to pay for the whole mess.

[joanmcq]

For the CP2000, give them a call. If I get an agent with half a brain they can usually do a revision over the phone.