Short Version - My parents have a Notice of Deficiency and according to the paperwork the choices are either agree totally with the notice and work on how to pay the tax or go to Tax Court. I know there is also the option of paying the tax and going to Superior Court to ask for it back but if we go to Court we will handle it as small matter with request for expedited processing.. What I really want to know is this. I could finish in an hour or two the response to the last letter (explaining why I believe my parents owe no more tax and might be due a refund) and fax it in. I could call the man before I did that. My grounds for the delay that has led to their sending the notice of deficiency is that my father has been having trouble with his legs for which he is facing surgery in August. Until the surgery he has pain and limited mobility and the loss of continence is possible but he won't die. Must we take this to tax court or is there hope in asking the IRS to listen to further arguments?
Longer Version - When I did my parents' return for 2006 I used a brokerage 1099 dated in March. The broker had always issued a corrected 1099 after the one in March so I waited until 4/15/07 to file the return. However the mail on that date brought a corrected 1099 dated 4/13. I looked it over and found only what seemed to be trivial differences. For one thing some dividend monies had been moved into less heavily taxed categories but we were talking only a few dollars and that did not seem to be worth amending the original return. I also noticed that a few trade dates had been shifted by a couple days, as if the difference was between trade date and settlement date. And one stock transaction said that we had received a few dollars less on the sale than the earlier statement. All in all I thought it was a tempest in a teapot and I took no action. In late Spring of 2008 my parents received a letter out of the IRS office in PA. My parents originally reported just over 100K of income and the IRS wanted 35K of additional tax, penalty, and interest. Then I screwed up massively. I thought it was my parents' 07 return that was being examined so I sent in a POA for that year's return along with a letter that must have made the IRS think I have lost my mind. (The mistake was easy to make because my Father year after year receives dividends from and buys and sells a list of ten or twelve obscure companies, literally none of which have ever shown up on the return of any other client He makes about two thirds of his money doing this and he enjoys it so I do not wish for him to stop.) The IRS wrote back saying (without saying why) that they could not respond to what had been sent to them so they were repeating their demand. Then my Father began to have non life threatening health problems and our family put taxes on the back burner. Dad did call the man who wrote from the IRS without involving me or telling me. I understood from this call that the man wanted copies of both brokerage statements because he apparently had only the last one and that he also wanted what we now believed the Schedule D should have been and he wanted arguments about the dividends. Oh I should have mentioned by now that the original return failed to list a couple of short sales which the IRS was now trying to make regular sales with no basis. Also in case I have not made this clear, in I think three cases the IRS was treating what was actually one sale as two sales because the original return said we sold a given amount of a stock on one date and the only brokerage statement they had showed a sale of exactly the same amount of the same stock a few days later.
What the IRS Man wanted (as noted above) is in progress on my computer. Is there any point in calling the man and/or in finishing it and faxing it to him? I could do that in an hour or two.
Longer Version - When I did my parents' return for 2006 I used a brokerage 1099 dated in March. The broker had always issued a corrected 1099 after the one in March so I waited until 4/15/07 to file the return. However the mail on that date brought a corrected 1099 dated 4/13. I looked it over and found only what seemed to be trivial differences. For one thing some dividend monies had been moved into less heavily taxed categories but we were talking only a few dollars and that did not seem to be worth amending the original return. I also noticed that a few trade dates had been shifted by a couple days, as if the difference was between trade date and settlement date. And one stock transaction said that we had received a few dollars less on the sale than the earlier statement. All in all I thought it was a tempest in a teapot and I took no action. In late Spring of 2008 my parents received a letter out of the IRS office in PA. My parents originally reported just over 100K of income and the IRS wanted 35K of additional tax, penalty, and interest. Then I screwed up massively. I thought it was my parents' 07 return that was being examined so I sent in a POA for that year's return along with a letter that must have made the IRS think I have lost my mind. (The mistake was easy to make because my Father year after year receives dividends from and buys and sells a list of ten or twelve obscure companies, literally none of which have ever shown up on the return of any other client He makes about two thirds of his money doing this and he enjoys it so I do not wish for him to stop.) The IRS wrote back saying (without saying why) that they could not respond to what had been sent to them so they were repeating their demand. Then my Father began to have non life threatening health problems and our family put taxes on the back burner. Dad did call the man who wrote from the IRS without involving me or telling me. I understood from this call that the man wanted copies of both brokerage statements because he apparently had only the last one and that he also wanted what we now believed the Schedule D should have been and he wanted arguments about the dividends. Oh I should have mentioned by now that the original return failed to list a couple of short sales which the IRS was now trying to make regular sales with no basis. Also in case I have not made this clear, in I think three cases the IRS was treating what was actually one sale as two sales because the original return said we sold a given amount of a stock on one date and the only brokerage statement they had showed a sale of exactly the same amount of the same stock a few days later.
What the IRS Man wanted (as noted above) is in progress on my computer. Is there any point in calling the man and/or in finishing it and faxing it to him? I could do that in an hour or two.
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