WTH Tax Notices-Post Your Favorite!

[Deleted]

Yesterday both my husband and I received separate notices from the IRS dated 8/1/2011 for tax year 2010

You have Unpaid taxes for 2010:
Amount you owed -103.79
Failure to Pay Penalty 105.62
Interest Charges 75.00

Amount due by August 11, 2011 $76.83

This is from their International Division. I know they didn't mail this letter on August 1st. At most mail takes 2 weeks from the States unless it goes through customs.

Two weeks ago we received a check for $153.75 with no paperwork.

I called them and after a 40 minute wait and another 10 minutes of identity verification (and yes, this is the international division) I was advised the notice was sent in error.

Last month we received a notice around July 6 that we had failed to pay our taxes. Between wait time, verification and discussion I spent about an hour correcting the application of our 2010 payment posted to our 2011 estimated tax account.

Since I won't ever get those two hours back I might as well enjoy reading about the silly notices you've received over the years.

Thanks for sharing!

[mwcpa]

I'll play...

this was a few years ago....

A client contacted me when they received a check for $1,000.00 out of the blue (noted as "940 refund".... 940 is the annual form for federal unemployment insurance). He checked his records and could only find that he paid $168 (he had 3 employees including himself). After getting a power of attorney (IRS will not speak to me without one, to protect the confidential information of the client) we were asked to prove we were not owed the money. I asked how do you prove that you did not pay something.

I had a copy of my client's account transcript that showed he paid $1,168 on a certain date.... that date corresponded to his check that was written and cleared for $168.

Knowing how the law works I asked my client to not deposit the check, note it as void... he did not want to hold it so he sent it to me....

Six month later he gets a bill for $1,500+.... IRS figured it out.... they assumed he cashed the check and charged penalties and interest for accepting the check that was not his....

Luckily as I kept the void check we mailed it back to IRS with a cover letter and a copy of the notice....

What a mess....and I spent about the same amount of time as you note bonnap.... and it was difficult to get paid for it.....

Moral of the story, never cash a check from the IRS (or any other taxing agency) unless you know the money is yours... and if money comes without explanation or does not agree to a refund claim you filed, wait a couple of days for a written explanation of change.... and if it does not come call the taxing agency before you cash it....

[Deleted]

Oh man...I knew you guys would have some good stories.

The small check was not out of the blue. It was approximately the payment and interest that would have been due had we not made our tax payment and filed our return on time.

As background DH's company did not provide corrected W-2s to us or the tax folks they pay to prepare our returns until April 11(!) . We had all of our other tax stuff in by February. However on April 14th we received our tax return and found out we owed $10,500 + another $4k for estimated tax payments all due by April 18th. The delay was cause by the company deciding to recalculate how they did withholding. So all along we thought the company was withholding US taxes (like they did in 2009) but in fact it was simply a place holder. So given we had received about $9k refund the year before, we were a little shocked we had to pay $14k within 2 business days. They were so rude to everyone involved. Fortunately we were really liquid at the time and trusty USAA bank was able to process a wire Monday the 18th. Therefore the the check we received from IRS was simply a refund of the penalty and interest the tax people had calculated based on an assumption we couldn't get the payment to the IRS by the 18th.

But that's really good advice MWCPA to not cash a check from the IRS unless you know what it's for!

[taxref]

Part of Bonnap's message actually ties into my top story. My top event was among my first, and it took place when I was a new accountant in the mid-1980s.

That was during a time when the IRS was in a state of change, as the agency had a very bad reputation for untoward actions and heavy handedness. Part of those abuses involved sending out very confusingly worded and yet threatening letters to taxpayers. Often those letters would give say, 30 days to respond. However, often they weren't received until 25 days past the date on the letter. It was clear the letters were dated long before the mailing date. As part of the IRS reforms, letters began to be dated with a mailing time factored in.

To get back to my story, I was a new accountant in a 4 person firm. A few months after I started, we had about 6 very worried clients come in with very nasty IRS letters. The letters accused the clients of not filing their 1040 for the previous year, gave them a very short time to file, and listed the civil and criminal actions which would be taken against them if they didn't file promptly. The worried clients all assured us they mailed in the returns we gave them.

After all the threats on the letter, however, each one had a statement at the bottom saying something like, "your account shows a credit in the amount of $X.XX. Please notify us of the disposition of this credit."

In each case, the amount of the credit was the same amount the client had paid with his return. It was obvious that the IRS had received the 1040s, cashed the checks, but then lost the returns. Rather than admitting their error and asking for a copy, they threatened to imprison the taxpayers for not filing.

[Mardi Gras Audrey]

taxref,
I was a full time student. I was going to be claimed as a dependent on my parents' return (I lived with them and was 19 years old). I filed early (1040EZ!!!) and noted that I could be claimed as a dependent. My refund was supposed to be around $300. I got a check for $900.... I was like . I called them and was informed that because I worked so much, I couldn't be claimed as a dependent. I informed them that I was a full time student and after reading the dependency rules, I qualified (It said nothing about a salary "threshold" at which you wouldn't be considered a dependent anymore). I also told them that my parents were going to claim me as a dependent (they like to wait until the last minute...there return was 1040 not so easy).

I was told that I could cash the check and wait for a bill to come after they filed ( ) or send it back with a letter explaining the situation and requesting the correct refund. I chose the returning the check (See previous other posts for why). I then waited for about 6 months and got no refund (Not even the $300 I was originally owed). I called them back and was advised that they were waiting for me to file a "1040X" amendment to my return. They wanted me to amend a return that was correct.... I was speechless (How do you (or why would you) "amend" something that is correct??).

I finally spoke to someone who had a brain and got my correct refund.... the level of incompetency amazed me (especially given that I was being honest and trying to GIVE the govt money)....