Nice elderly lady is getting taken

[tacks]

Thanks for responding, Rita.

My client told me, "That was really stupid - to know you've messed up, know we all know you've messed up, and not just admit it."

My client said the same to me. What's worse is that a little note from them owning up to small miscommunication would have made this process butt easy and worry free.

But unfortunately there wasn't a clear paper trail in which we could easily prove the bank at fault. We all know their at fault but we can't prove it.

...my widow client will be moving her business. Not because of the goof up, but because the bank wouldn't OWN the goof up.

As will my client for the same exact reason.

Thanks... and for sticking with it.

After some time i created somewhat of a vested interest in this case. I was not going to bill my client for the time if we didn't win.

(surely i'm breaking some law, but **** it)

[RitaB]

Nice work, tacks

Thanks for telling us what happened, and for sticking with it.

I have a client with something similar, where bank set up an inherited IRA incorrectly. Kept telling the widow that SHE messed up, and THEY had no way of knowing... Widow is pretty sharp, went to the bank, had representative looking through her file, and stopped the bank rep when she came across the death certificate of the husband. Hmm, that might be a clue that he's deceased...

The bank employee actually said, "Rita (that's me) must have faxed that to us yesterday." Really??

My client told me, "That was really stupid - to know you've messed up, know we all know you've messed up, and not just admit it." Yes, we have a good number of banks here, and my widow client will be moving her business. Not because of the goof up, but because the bank wouldn't OWN the goof up.

[tacks]

bump

My action:
I sent 21 pages requesting two waivers under code section 403(c) (?) -- two of the waiver provisions described in Rev Proc 2006-16. She qualified for a waiver due to 1) bank error and 2) hardship (long story).

I requested 8,300 of tax, penalty and interest be waived.

IRS sent a response denying my request. (The response was absolute garbage. It didn't even address Rev Proc 2006-16 -- it was as if they didn't even read my letter.)

So I called the IRS and pleaded my case politely. I was lucky enough to get one of the 'good' agents. She reviewed my case and saw that we made a lot of good faith effort to comply with the notice on a timely basis.

I had solid arguments accompanied by many pages of bank statements, medical records and other such support.

The agent on the phone then granted us the waiver of $8,300. She gave us everything that she could -- every penny that we asked for. She even went so far as to waive the small portion of the negligence penalty ($140?) which was caused by an oversight on my part. An error, oversight, that i confessed to making on the first page of my response. (A penalty that i would have otherwise eaten myself.)

Although the agent could see that we did send a response she didn't have it in front of her. But she granted our request any way; basing her decision on 'oral testimony.' I took her name and ID number.

So as it turns out i actually put more work in to this case than i needed to. I did put an extra, not necessary, 100 or 200 dollars worth of time trying to save $8,300. My bill will still be less than any other CPA w/ my credentials -- still be much less than what a lawyer would charge.

So be it. In this case I'd rather do too much than too little.

Thanks

Thanks to those who helped me on this. And never mind how i feel, know that you were crucial in serving a sweet elderly grandmother who's retirement finances were neglected shamelessly by some awful bankers. Awful bankers who refused to help out even after the fact.

May all of us be so fortunate.

[tacks]

bump

Hello all

I was concentrating so much on the bank accounts and money trail that i neglected other strong factors within "of Rev Proc 2003-7.

This woman knew/dated a man who was diagnosed with dementia and then Alzheimers. A social worker declared the man unable to live with himself. He moved in with her. She then became legal guardian. She was hounded by creditors because the man's debts ran up. The man's $$$ had myseriously dissappeared.

I guess it would be wise not only to mention this but to fully document it.

Right?


(never done something like this before)

[tacks]

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

I might not get that.

But it's looking like I will have documentation showing that my client set up a new "IRA Rollover" account well within the 60 days. Deposited the entire distribution from her old IRA to the bank. But the bank, instead put the money in a Nonqualified Account.

My client is elderly and her live in partner became stricken with what i'd call the "later stages of alzhiemers." Not yet sure how i'll word that. Maybe send documents.

[JohnH]

Hopefully there are plenty of other banks in town.

[tacks]

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

Jon, i was just on the phone with a bank guy today. I don't know if they're going to do that.

This one bank fellow i talked started getting a little proud. He looked at such letter as some big admission of defeat -- MFer. Just ignore the fact that such a letter would be a great help to one of clients -- a nice elderly lady.

It's not llike the bank would really get any repercussions from that, would they? It's not like we/I would go badmouthing them if they gave us such a letter as a favor. I'd never use it against them.

Maybe instead of asking them to "admit fault." Say something like it's "possible that one our tellers had an oversight." Or even "the folks on the investment side weren't communicating with the folks on the banking side." But they ought do something!

[tacks]

Thanks veritas

[tacks]

thanks erchess

[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?

[JON]

Get the bank

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

[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.

[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.

[tacks]

Thanks Black Bart

[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).