I will try to make this as short as possible but I will include some details that may help someone on this board.
Client omitted some stock sales and received a CP2000 for tax year 2009, you know the story right? Well the IRS proposed tax on the sales price with no basis, assumed it was all short term gains, etc. included in the tax calculation is an accuracy related penalty (total increase in tax on their proposal was greater than $5,000). No big deal, been here, done that.
I filed an amended return because the stock sales resulted in a capital loss for the tax year (2009) and the loss was large enough to carry into 2010 so I also amended 2010. Refunds for both years resulted, everybody is happy.
The client receives a series of letters. The first letter applied the 2010 refund ($1900) to the proposed balance due for 2009. Remember the amended return for 2009 yielded a refund. The next letter stated the client was due a $600 refund for 2009; huh?
I called the Practitioner Priority Service (PPS). The first guy tells me the accuracy related penalty was not removed, and I told him it should be because if there is no tax due there are no penalties. He tells me I have to file form 843 along with a letter asking for abatement. I hung up and called them back, hoping to find someone with some common sense but alas, no such luck. She stonewalled me just like the other agent. This is PPS! I told the agent I have done this procedure at least a hundred times and she tells me, "We'll the rules are changing all the time, everyday, sometimes every minute (clearly being sarcastic)". I said, "what a burden on the taxpayer!" She said, "The taxpayer? What about us? We have to learn this stuff!" I rudely thanked her for wasting my time.
I called TAS (taxpayer advocate). She told me this was not the realm to debate penalties and I should write a letter. I told he there is no reason to write a letter, the IRS should automatically abate the penalty! She then transferred me to the AUR office because they were the ones that charged the penalty.
I haven't dealt much with AUR but this guy was on the ball. He said, after checking my facts and the client's returns, that it is pretty obvious the accuracy related penalty should have been removed automatically! Amen brother! Finally someone who gets it! He said the penalty was erroneously staying on the account even though the tax on the CP2000 was corrected by the 1040X. He also said there was a glitch in the computers hat caused this to occur (this could be beneficial to someone). I am sure there must be other taxpayers who have had this happen to them, maybe some of your clients.
The point of this story is to not give up and like LG Brooks says, "Sometimes you have to tell the IRS how to do their jobs!" Or something like that. It's a shame the IRS gets away with treating taxpayers this way. If my client would have called the IRS, she would've probably given up with he first guy. Unbelievable! Just don't give up guys and do your homework, the IRS will run you over if you let them. They really, really don't like doing their jobs (there are a few who do).
Client omitted some stock sales and received a CP2000 for tax year 2009, you know the story right? Well the IRS proposed tax on the sales price with no basis, assumed it was all short term gains, etc. included in the tax calculation is an accuracy related penalty (total increase in tax on their proposal was greater than $5,000). No big deal, been here, done that.
I filed an amended return because the stock sales resulted in a capital loss for the tax year (2009) and the loss was large enough to carry into 2010 so I also amended 2010. Refunds for both years resulted, everybody is happy.
The client receives a series of letters. The first letter applied the 2010 refund ($1900) to the proposed balance due for 2009. Remember the amended return for 2009 yielded a refund. The next letter stated the client was due a $600 refund for 2009; huh?
I called the Practitioner Priority Service (PPS). The first guy tells me the accuracy related penalty was not removed, and I told him it should be because if there is no tax due there are no penalties. He tells me I have to file form 843 along with a letter asking for abatement. I hung up and called them back, hoping to find someone with some common sense but alas, no such luck. She stonewalled me just like the other agent. This is PPS! I told the agent I have done this procedure at least a hundred times and she tells me, "We'll the rules are changing all the time, everyday, sometimes every minute (clearly being sarcastic)". I said, "what a burden on the taxpayer!" She said, "The taxpayer? What about us? We have to learn this stuff!" I rudely thanked her for wasting my time.
I called TAS (taxpayer advocate). She told me this was not the realm to debate penalties and I should write a letter. I told he there is no reason to write a letter, the IRS should automatically abate the penalty! She then transferred me to the AUR office because they were the ones that charged the penalty.
I haven't dealt much with AUR but this guy was on the ball. He said, after checking my facts and the client's returns, that it is pretty obvious the accuracy related penalty should have been removed automatically! Amen brother! Finally someone who gets it! He said the penalty was erroneously staying on the account even though the tax on the CP2000 was corrected by the 1040X. He also said there was a glitch in the computers hat caused this to occur (this could be beneficial to someone). I am sure there must be other taxpayers who have had this happen to them, maybe some of your clients.
The point of this story is to not give up and like LG Brooks says, "Sometimes you have to tell the IRS how to do their jobs!" Or something like that. It's a shame the IRS gets away with treating taxpayers this way. If my client would have called the IRS, she would've probably given up with he first guy. Unbelievable! Just don't give up guys and do your homework, the IRS will run you over if you let them. They really, really don't like doing their jobs (there are a few who do).
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