Nice elderly lady is getting taken

[tacks]

This woman opened up an IRA with XXXX bank in 2008. I have information about the account. It's titled "Mary XXXXX" and it expressly states "IRA Rollover."

She transferred her IRA account from one outfit to XXXX bank. But someone messed up big time!

(and i don't think it was he who messed up) They put her IRA rollover money in a regular account!! Triggering a large taxable gain and the IRS notice.

What remedies are available to this woman?!

Can i write a letter to the IRS and appeal this somehow? (i have power of attorney)

What about the Taxpayer Advocacy center? Might they be able to advise us on this matter.

Any ideas? please

(and if anyone wants to critisize me for not immediately recognizing the gravity of this situation. well go right ahead. it's the absolute least of my worries at this point)

thanks for reading

[ChEAr$]

This woman opened up an IRA with XXXX bank in 2008. I have information about the account. It's titled "Mary XXXXX" and it expressly states "IRA Rollover."

She transferred her IRA account from one outfit to XXXX bank. But someone messed up big time!

(and i don't think it was he who messed up) They put her IRA rollover money in a regular account!! Triggering a large taxable gain and the IRS notice.

What remedies are available to this woman?!

Can i write a letter to the IRS and appeal this somehow? (i have power of attorney)

What about the Taxpayer Advocacy center? Might they be able to advise us on this matter.

Any ideas? please

(and if anyone wants to critisize me for not immediately recognizing the gravity of this situation. well go right ahead. it's the absolute least of my worries at this point)

thanks for reading

Your initial approach is to work within the IRS system. You have the document from the
bank stating it was an IRA. You do need for client to get a letter from the bank admitting
they goofed and have corrected the situation. Then work with PPS to resolve the issue.

ONLY if this fails do you consider involving TA in the issue.

[David1980]

Hmm, are you sure the account is a regular account and not an IRA account she put the money into? It could be an IRA account and the rollover simply not reported on the tax return causing the IRS letter. Just a thought.

[tacks]

Thanks ChEAr$

[tacks]

Thanks again, ChEAr$

Then work with PPS to resolve the issue.

Please excuse my ignorance but who is/are the PPS?

(maybe you're referring to the Pathetic Pile of XXXXXX that goofed up?)

[tacks]

Hmm, are you sure the account is a regular account and not an IRA account she put the money into? It could be an IRA account and the rollover simply not reported on the tax return causing the IRS letter. Just a thought.

Hi David,

Others thought the same thing but unfortunately that's not the case here. I went over this with the bank. (the knucklehead who did this is no longer at the bank)

[veritas]

There is a revenue procedure

IRS Rev. Proc. 2003-16

It looks like a letter ruling will be required. If the error had been corrected within one year beginning with the 60 day period the approval would have been automatic.

The bank needs to pay the costs.

[Lion]

Pps

Practitioner Priority Service at 866-860-4259 sometimes referred to as Practitioner Hotline.

[tacks]

thanks everyone

appreciate the help

[Black Bart]

I had a similar case five years ago; bank put IRA into a regular CD. I got a POA and simply wrote a letter stating the facts to the regular IRS office at Austin (slow going -- I wrote in April; they replied in August). IRS letter said "As per our technical advisor, you may move the monies of $XXXXX to a qualified account and you should not (note: this was a little too vague to suit me, but the return went through okay) be penalized because you were not aware of certain accounts regarding your ill parent. Please attach a copy of this letter to your form 1040. If you have any questions please call..." blah, blah, blah.

Only thing, my client was seriously ill and medical mumbo-jumbo almost always works wonders with IRS (I sent the bills with the letter). Since your excuse is that the bank botched the job, it may be a little harder to get 'em off the hook, so I'd probably go with either PPS or Taxpayer Advocate (877-777-4778). The difference between the two is that PPS is for us only and TA is for all taxpayers (I'm unsure which is best, but ChEAr$ usually knows whereof he speaks).

[tacks]

Thanks Black Bart

[erchess]

I can confirm

that you only go to the Taxpayer Advocate when regular channels have failed. I have done this wrong ant it's a waste of time. I once filed with the TA because my client was about to have wages garnished. I got back a letter a week later that this could still be cleared up through normal channels. Well it was now I think 24 hours before payroll department was to prepare the pay check and they were all set up to garnish because the relevant order from the IRS had been received but I still got an end of the garnishment through normal channels in exchange for an installment agreement. I looked like an idiot to the IRS but boy to my client I looked like a knight in shining armor.

[veritas]

While I would try the phone call

here is what the procedure tells us to do:

SECTION 3. REQUIREMENTS FOR HARDSHIP EXCEPTION TO 60-DAY
RULE
.01 Application to the Service. Except as provided in Section 3.03 below, a taxpayer must
apply for a hardship exception to the 60-day rollover requirement using the same
procedure as that outlined in Rev. Proc. 2003-4 for letter rulings, accompanied by the
user fee set forth in Rev. Proc. 2003-8.
.02 Requirements for favorable ruling. The Service will issue a ruling waiving the 60-day
rollover requirement in cases where the failure to waive such requirement would be
against equity or good conscience, including casualty, disaster or other events beyond the
reasonable control of the taxpayer. In determining whether to grant a waiver, the Service
will consider all relevant facts and circumstances, including: (1) errors committed by a
financial institution, other than as described in Section 3.03 below; (2) inability to
complete a rollover due to death, disability, hospitalization, incarceration, restrictions
imposed by a foreign country or postal error; (3) the use of the amount distributed (for
example, in the case of payment by check, whether the check was cashed); and (4) the
time elapsed since the distribution occurred.
.03 Automatic approval. No application to the Service is required if a financial institution
receives funds on behalf of a taxpayer prior to the expiration of the 60-day rollover
period, the taxpayer follows all procedures required by the financial institution for
depositing the funds into an eligible retirement plan within the 60-day period (including
giving instructions to deposit the funds into an eligible retirement plan) and, solely due to
an error on the part of the financial institution, the funds are not deposited into an eligible
retirement plan within the 60-day rollover period. Automatic approval is granted only: (1)
if the funds are deposited into an eligible retirement plan within 1 year from the
beginning of the 60-day rollover period; and (2) if the financial institution had deposited
the funds as instructed, it would have been a valid rollover.

[JON]

Get the bank

to put into writing they blew it and it should be an IRA account. It works like magic...

[Black Bart]

Say V,

here is what the procedure tells us to do:

...03 Automatic approval. No application to the Service is required if a financial institution
receives funds on behalf of a taxpayer prior to the expiration of the 60-day rollover
period, the taxpayer follows all procedures required by the financial institution for
depositing the funds into an eligible retirement plan within the 60-day period (including
giving instructions to deposit the funds into an eligible retirement plan) and, solely due to
an error on the part of the financial institution, the funds are not deposited into an eligible
retirement plan within the 60-day rollover period. Automatic approval is granted only: (1)
if the funds are deposited into an eligible retirement plan within 1 year from the
beginning of the 60-day rollover period; and (2) if the financial institution had deposited
the funds as instructed, it would have been a valid rollover.

This is great news. Have you done this? How do you notify IRS if it's automatic? Put it on a 5329 or sump'n?