Client was just divorced in 05. They qualified to file 2 single returns for 04, and they did. Husband made 04 Estimated 1040 pmts of 40,000 under his Soc Sec#. Wife reimbursed him 1/2 of this becuase it was really for both of them. I credited 1/2 of the payment on his 1040, and 1/2 of pmt on her 1040. I marked the 1040's according tp IRS instructions that I'am allocating the payments. IRS just sent husband a notice that he's getting a 20,000 refund due to an error on the estimated payments. IRS just sent wife a bill for 20,000 (1/2 of estimated pmts) and 4000 penalty. IRS also put on wife's notice at the bottom, informing her she has a 20,000 credit coming to her in the next 4 to 6 weeks. The way I see it, I have 2 options: 1) do nothing and wait for the IRS credit to wife to come through; then if IRS is trying to collect the 4000 penalty, plead for reasonable cause. or 2) Contact IRS now and try to straighten it out now before IRS does anything else. Any thoughts or experiences with this?
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My situation was somewhat similar, only it was the surviving widow of the decedent. IRS credited the payment to the decedent’s SSN and billed the surviving widow, even though a joint return was filed in the year of death. I called IRS right away to straighten it out. The person on the phone saw it on her computer screen and said no problem to fix. It still took two years after that before everything got fixed. So my advice is to start now by calling. Logic doesn’t always apply when dealing with IRS on these types of issues. -
Est. Tax Payments
Had the same situation several years ago. Took quite a while to straighten out.
Suggest calling the Practitioners Hot Line. Maybe this can fix the problem faster.Comment
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