we were right all along

[jainen]

My client paid $570 with an amended 2003 return. The IRS posted it to 2002 where it generated a refund. We had to sue the U.S. Treasury to get them to look at the amended return. Now they say we were right all along, so send back the $570 plus interest. Would you call the erroneous posting and refund a ministerial act that could justify abating the interest?

[S T]

Erroneous Refunds

My client paid $570 with an amended 2003 return. The IRS posted it to 2002 where it generated a refund. We had to sue the U.S. Treasury to get them to look at the amended return. Now they say we were right all along, so send back the $570 plus interest. Would you call the erroneous posting and refund a ministerial act that could justify abating the interest?

I do believe that if the taxpayer receives a refund that they feel that is incorrect, they are to return the check uncashed to US Dept Treas and mark the check void, (not cash the check) and follow up with a letter that the account be corrected. At the very least if the taxpayer cashed the check, then they should immediately issue their personal check for a like amount and send to the IRS with an explanation.

Since the taxpayer did not return the refund check and ask for a correction posted to the proper tax year, the taxpayer might be obligated to pay the interest that has accrued.

Sandy

[Bird Legs]

Uncashed refund check.

If the refund check had not been cashed, no interest due. Just return the uncashed check.

[Black Bart]

Interest abatement

Would you call the erroneous posting and refund a ministerial act that could justify abating the interest?

Yes.

I don't know who I'd complain to at IRS, but I'd complain to somebody.

Item of interest: About 15 years ago I saw a Xerox copy of an erroneous IRS check for one million, three hundred thousand or so, I think it was. A practitioner brought it to a tax seminar and was showing it off to everybody. His client was supposed to have received a refund of about $1,300 and got that amount instead. The T/P sent it back to IRS (wonder if it would have been illegal to cash it and move to Bongo Bongo?). He didn't say whether or not the IRS caught the error before they sent it back or not and I don't know what the upshot of it all was.

If he had cashed it, I think he might have owed the interest on it, since he obviously knew it was incorrect (that probably answers my Bongo Bongo question, too).