Help With Notice

[geekgirldany]

Clients received notice on First Time Home Buyer Credit. Clients sold house in 2013 and had a loss so the credit did not have to be paid back. There was only one Form 5405 filed, taxpayer SSN. I knew the credit was split between taxpayer and spouse but I did not understand about sending a separate Form 5405 for the spouse until after the fact. So the IRS is saying they owe $260 for spouse half of credit that should have been repaid in 2013.

I called a month ago to Tax practitioner Hotline. I was told it would be sent over to the FTHB credit "department" to be resolved and I would be called about it. I am a third party designee did not do a POA yet.
So that month goes by. Called yesterday, was told it was never sent to the FTHB department and that I should do an amended return, send in both Form 5405, and let that process. There is an hold on the account.

Now, I thought when the taxpayer receives a notice that you are not suppose to do an amended return. Respond to the notice. Correct?

I am thinking of doing an amended return but sending it to the address on the notice and putting "do not process" on top of the 1040X with an explanation.
Would that be the best way of handling it.

Disappointed this time with the IRS... lack of handling problems is getting bad.

[Lion]

I haven't had one of these, Dany, but I would probably "disagree" with the notice and attach the two 5405s to the notice or the 1040X with two 5405s. Or, make another call to the # on the notice to see what they really want and if you can fax whichever to that person while on the line. (I get more and more frustrated with the IRS.)

[ATSMAN]

For some reason I am seeing a lot more CP2000 this year than before. One of my clients just got a notice for a 1099-R that was included in her 1040. IRS is double counting that because the deficiency they are showing is the exact same amount? Taxpayer only has one IRA account and just took one distribution. Tried calling them with client in my office and after 45 minutes gave up waiting on the phone. So we responded in writing disagreeing with our copy of 1099-R and 1040 to show that it was included in the return and still waiting to hear back. It has been a month now?

[Gary2]

For some reason I am seeing a lot more CP2000 this year than before. One of my clients just got a notice for a 1099-R that was included in her 1040. IRS is double counting that because the deficiency they are showing is the exact same amount? Taxpayer only has one IRA account and just took one distribution. Tried calling them with client in my office and after 45 minutes gave up waiting on the phone. So we responded in writing disagreeing with our copy of 1099-R and 1040 to show that it was included in the return and still waiting to hear back. It has been a month now?

The first thing I would have done for this case is to get the Wage and Income transcript. The client can get it immediately using the new system, which saves you the trouble of getting the POA processed.

[Gary2]

Clients received notice on First Time Home Buyer Credit.

Please always, always tell us what type of notice: CP2000, correspondence audit, or something else.

For a CP2000, I've generally found the number on the form to be more efficient than the practitioner line. Just try to schedule for early morning, Tue through Thu (less busy than Mon or Fri).

[geekgirldany]

Sorry about that, I know better, the Notice is a CP11.

I've always had such good outcomes on the Tax Prac Hotline. I can give the number on the notice a call and see what they say. I always get them in the morning Thinking though that sending correspondence may be the way to go.

[taxea]

I agree that a 1040X should be submitted. Without a POA your 3rd party designation is only good until the following 4/14.

[geekgirldany]

I called the number on the notice a few minutes ago. They confirmed that a 1040X should be filed. I hate that a month was wasted from my first call. This is a 2013 tax return.

So, on the 1040X, since the IRS has "corrected" the return and added the additional tax... I should then use as the original numbers, what the IRS has down now, and then put in the correction showing that the FTHC is not owed.
Does that sound right?

[DonB]

Sounds right to me-- Column A says "or as previously adjusted"

Don