Rounding

[dyne]

A client brought a letter from IRS which proposed to access a tax claiming that the taxpayer did not report 4 differant items of IRA or retirement income distributions. For all four amounts I reported these amounts but rounded UP to the next dollar. IRS reflects these amount by rounding DOWN. $1 differance in EACH of the four amounts. That suggests to me that in the future we should enter ONLY the whole dollar amounts for EVERYTHING and NOT round up or down. That will be easier.

[BOB W]

I saw the same thing recently also..... Why would they care about $1 either way?

[dyne]

Apparently their computer can NOT round! If IRS had proposed tax on $4, $1 for each of four IRA or retirement distributions I would have advised that she agree. But IRS also proposed tax on two amounts which she rolled over. I advised this client that it would be better if she does NOT rollover constantly as she does.

[JohnH]

Probably the same people who will spend hours trying to reconcile a 99 cent error on a balance sheet out of fear that "it might be a $9,999.01 error". I used to hear that argument from obsessive compulsive bookkeepers so much that I wanted to throw up. I would always ask, why might it not be a $999,999,999.01 error?

A little common sense would go a long way, wouldn't it?

[Uncle Sam]

Rounding

This situation is definitely grounds for writing to your Congressman/woman to complain.

[Possi]

Round and Round

They round down, Taxwise rounds up.

Let's all round down on income and up on withholding!

=)

[dyne]

I have written to our Congressmen only ONCE during the 28 years I have been preparing
tax returns and then only because nothing else would stop IRS from assessing a tax
which was bogus and not owed. I wonder what Uncle Sam would have done? Would he have
allowed the tax to be assessed? How would he like to have a $5,000 tax assessment made
against him which he clearly did NOT owe? I had exhausted all appeal procedures except that
of taking the matter to court. I met with an IRS Appellate Confereee who advised me that I
was absolutely right in my interpretation of the tax laws regarding the issue but it was the
position of the IRS that my client had to pay the tax anyway. A statutory notice of deficieny letter
had been issued. I referred the client to a local Tax Attorney who declined to take the case
to court. My letters to our Congressmen prevented IRS from assessing the tax which was
clearly not due. I believe that my action was absolutely correct.

[taxea]

Probably the same people who will spend hours trying to reconcile a 99 cent error on a balance sheet out of fear that "it might be a $9,999.01 error". I used to hear that argument from obsessive compulsive bookkeepers so much that I wanted to throw up. I would always ask, why might it not be a $999,999,999.01 error?

A little common sense would go a long way, wouldn't it?

only in the movies do computers have common sense. I would send the IRS their instructions on rounding...but first make sure it wasn't 49 cents rounded to the higher dollar. IRS rule is round to the nearest dollar, not to the next dollar.

[joanmcq]

Actually, the IRS computer drops the cents. But I've never seen a notice where they couldn't match because of a few dollars.

[JohnH]

only in the movies do computers have common sense. I would send the IRS their instructions on rounding...but first make sure it wasn't 49 cents rounded to the higher dollar. IRS rule is round to the nearest dollar, not to the next dollar.

I don't expect computers to have common sense. But it isn't expecting too much to hold the people who program them responsible for using common sense. Blaming the computer is a lame excuse.

[dyne]

I came close to writing our Congressmen AGAIN after more than 21 years since my last letters to Congress.
I had already prepared drafts of two letters to our Congressmen but I did NOT send them. My daughter's friend was disallowed her two dependent children and Head of Household Status which she was CLEARLY entitled to claim. IRS argued and proposed to assess a tax. I finally told the IRS auditor that I would write to our Congressmen about the matter. This is a dangerious thing to do as IRS could claim this was a threat. But I heard today that IRS has conceded the issue in this case and will NO CHANGE the return. They said it was a KEYING MISTAKE on their part. They planned to assess more than $3,000 in tax against a young lady who is struggling financially to support herself and her two children.

[joanmcq]

What type of info did she submit to prove her claim when she initially got audited? How did it get to the point where they were garnishing her wages? It takes a long time before an audit proceeds to collections to an actual wage levy.

[dyne]

I did NOT prepare her return. It is still rather vague to me. It is my understanding that she never received the mail sent to her as she had moved several times. Also she is somewhat scatter-brained so is difficult to understand. When she contacted me I had her submit copies of the birth certificates of the children and various statements of proof that she paid utilities, etc. The only thing I ever saw was a copy of the original audit report. At first the IRS Auditor would not talk to me at all. Later I submitted a power of attorney. Even then I learned practically nothing from him. I STILL have only written to our Congressmen ONCE during my 28 year career as a tax preparer and that was about 21 or 22 years ago. On 5-4-11 I received a NO CHANGE letter regarding the matter.

[luke]

This would've been a good one to get Taxpayer Advocates Office involved! I had a similar situation and after fooling with it for several months, turned it over to TAO and got resolution (after about 45 more days)!

[joanmcq]

Well, yes, of course they would not talk to you without a POA. The correct way to go about this is to request audit reconsideration, saying that the taxpayer did not have a chance to submit information due to________. If the info was never submitted to address the audit and they had no response from her until her wages were levied, how do you expect the IRS to proceed?

There are specific items the IRS requires to prove dependency, HOH, and EIC. These areas are often audited because they are often abused. And if the collections went all the way to levy, the original auditor would initially not have the case anymore. It would have to be reopened through the recon procedure, which generally isn't difficult if you have a decent reason for recon (not just, "we didn't like the results".)