Serious IRS computer glitches

[taxea]

Is it just me or are any of you also beginning to receive CP2000 letters from the IRS that appear to be an error on their part?
One of my clients received correspondence for unreported income where the IRS claimed that a 1099 was not included in his return. It was included on the Sch C (where it belonged) but for some reason the IRS computer missed the entry which was properly entered.
Another client had the IRS ask for proof of mortgage interest claimed. On this return, another Sch C, a percentage of the interest was deducted on the 8829 and the balance on the Sch A.
I know from media reports that the IRS had problems with 2005 refunds being sent out when they should have been held due to a program failure. I'm just wondering how to find out from them what other problems they are having with the 2005 program.
This is very serious for us, the preparer, because the client thinks we are making the mistake, the client is paying to have these issues corrected and the IRS is not going to reimburse the taxpayer my fees for the IRS mistakes.
tacea

[Unregistered]

Oh contrair monfrair (or something like that),

if the IRS made a mistake and you represent a client, they can apply for reimbursement of fees paid. I don't remember where, but TTB covers it.

JoshInNC

[taxea]

Serious IRS program glitches

Mahalo...I will research it. If you find it before I do please let me know where it is.
taxea

[Jiggers]

Reinbursement from IRS?

if the IRS made a mistake and you represent a client, they can apply for reimbursement of fees paid. I don't remember where, but TTB covers it.

JoshInNC

Please post on how to do this.

[Unregistered]

I think the poster may be referring to the provisions of IRC §7430 - Awarding of costs & certain fees. If so, this is NOT a simple exercise.

New York Enrolled Agent

[sea-tax]

I had a similar problem - A new client came in with an IRS letter for tax year 2005 which he prepared. It said he owed like 4000 dollars. So I looked at the tax return and looked at the letter . Guess what? The IRS forgot to apply his federal withholding amount from his w-2. I guess anyone would owe if you didn't get credit for tax you had already paid.
So I called the IRS with client and got it straight . The funny thing was they had the w-2 just didn't enter it in.

[DaveO]

We had problems with Schedule "C" returns.

We had some returns for people doing direct sales where they have product sales income and a 1099 from the company that represents premiums and prizes.

We listed the 1099 income on line 6 "Other Income" of the "C" since it was not sales income. In cases where the 1099 dollar amount was higher than the amount reported on line 1 of the "C" the clinet received a CP 2000. Reporting the 1099 income in this manner has been the firms practice for many years and we have never received a notice like these before.

The only difference now is that we are E-Filing all qualified returns. I suspect it's a problem in the program that reads the "C". We have met with several Revenue Agents in our area and have reported this through the Taxpayer Advocate service. They had no explanation for the notice but they did agree with the manner in which we reported the income.

[taxea]

I think the poster may be referring to the provisions of IRC §7430 - Awarding of costs & certain fees. If so, this is NOT a simple exercise.

New York Enrolled Agent

Thanks I'll look at that. taxea

[Armando Beaujolais]

Try "Caspian Consulting Group," T.C. Memo 2006-85, April 25, 2006. The Tax Court awarded litigation costs to the taxpayer.

http://www.ustaxcourt.gov/

[JoshinNC]

I never said it was easy!

I think the poster may be referring to the provisions of IRC §7430 - Awarding of costs & certain fees. If so, this is NOT a simple exercise.

New York Enrolled Agent

But, it is possible to have the taxpayer's fees for representation paid back to them by the IRS when the reason for representation is erroneous IRS work.

[taxea]

Is there any simpler way? taxea