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Old 08-13-2016, 10:45 AM   #21
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Didn't you receive a 1099R with your other tax papers?

Depending on your state, you may have a significant error regarding your state income tax return, would be best to file an amended return if that is the case. They will likely hit you with an interest penalty but not a negligence penalty as the feds probably have if you file an amended return before they send out a letter.
There was a 1099 (according to the annuitant) but apparently misplaced, or thrown out with other mail, and didn't remember. Stupid, I know.

I'm going to check on the State. I am sure their will be at least interest if not a penalty there as well.
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Old 08-13-2016, 11:03 AM   #22
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With Congress continually underfunding IRS staffing, it's not a surprise to me. From what I have observed at my CPA firm (my seasonal employment), 12-18 month is about the norm.
I suspect that the IRS is way behind in technology too. It shouldn't take long to match up 1099's with an individual's return. Maybe some Canadians can chime in here but my mother in Canada gets a "Notice of Assessment" within a couple of months after the return is filed and I'm quite certain that notice would catch something as glaring as a missed T slip (akin to a 1099).
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Old 08-13-2016, 01:25 PM   #23
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Definitely make timely payment in full but consider requesting a waiver of the penalty due to the one time nature of the error (inheritance distribution). You may have to do some "creative" writing but the Service is reputed to be a bit more flexible with penalties and may give you a waiver for all or some of the penalty.
Cost nothing to ask.
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Old 08-13-2016, 01:46 PM   #24
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They have 3 years to "correct" your return. Be happy they didn't take longer.
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Old 08-13-2016, 02:22 PM   #25
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This brings up a good point about 1099 forms. I have a very small internet business that I use PayPal for. I included all the sales from my website on my Tax forms. I do all sales vis the web site. BUT I use PP or everything. Personal things I have sold that are not business related. I have been selling off a lot of hobby items purchased before the business went into play. I do not put them on my taxes as it is not applicable and is not income.

PayPal just sends out 1 1099 for all and does not differentiate.

I wonder how that will work?
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Old 08-13-2016, 03:11 PM   #26
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Originally Posted by RE2Boys View Post

Depending on your state, you may have a significant error regarding your state income tax return, would be best to file an amended return if that is the case. They will likely hit you with an interest penalty but not a negligence penalty as the feds probably have if you file an amended return before they send out a letter.
I found out in CA, at least. the IRS and the FTB talk to each other. I had been audited by the IRS, and the state then came after me.
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Old 08-13-2016, 03:15 PM   #27
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From what I've heard the Franchise Tax Board makes the IRS look like nice guys -
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Old 08-13-2016, 05:05 PM   #28
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I just got hit with a $25 fine for not filing a local earned income tax return last year...I didn't file because I had no earned income since I'm retired. What a scam!
Enjoying life!
By living in the city we do, we are suppose to file local taxes every year. They do have a box for retired and no retirement income. After 3 consecutive years one does not need to file again unless one has retirement income in a given year. Note the rental income, LP income (like K-1) and the like will make one have to file. So if one has MLPs in taxable accounts, one would likely have to file even if resulting income is 0.

This will be my first year checking no retirement income.

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Got off easy? I'm paying $40k in just federal taxes, hardly getting off easy. Just seems they took a long time. Yes, I know it was my fault, I screwed up, etc. but we are all human and I am not one to try and blow off my "responsibility to the rest of society". Just think they should have it figured out within 6 months or so, versus 18 months.
I feel your pain, but it is documented that it is your responsibility to get it right. About a decade ago I got an IRS notice that I owned them something like 15k or 30k and had 2 weeks to respond. This was only 1 year after filing. I sorted it out, amended my taxes and asked them to to send me $80 that I had left on the table. They did not pay me interest on the money I missed on my taxes.

It is a pain to get taxed with interest. But it is the rules. From the shock I got from the IRS letter... I work harder at not missing something.
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Old 08-13-2016, 05:55 PM   #29
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There was a 1099 (according to the annuitant) but apparently misplaced, or thrown out with other mail, and didn't remember. Stupid, I know.

I'm going to check on the State. I am sure their will be at least interest if not a penalty there as well.
Actually I'd let the state find you...Calculated risk and all that
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Old 08-13-2016, 05:58 PM   #30
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Definitely make timely payment in full but consider requesting a waiver of the penalty due to the one time nature of the error (inheritance distribution). You may have to do some "creative" writing but the Service is reputed to be a bit more flexible with penalties and may give you a waiver for all or some of the penalty.
Cost nothing to ask.
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Considering the amount I'd ask for a reduced settlement (can't hurt to ask) and ask about making payments or something. They can't shoot you for asking and you never know.
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Old 08-13-2016, 07:08 PM   #31
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This brings up a good point about 1099 forms. I have a very small internet business that I use PayPal for. I included all the sales from my website on my Tax forms. I do all sales vis the web site. BUT I use PP or everything. Personal things I have sold that are not business related. I have been selling off a lot of hobby items purchased before the business went into play. I do not put them on my taxes as it is not applicable and is not income.

PayPal just sends out 1 1099 for all and does not differentiate.

I wonder how that will work?
I think you're saying that you received a 1099 for $100, for example, but typed in $75 in your tax form.

You should enter the 1099 total accurately, and then attach an explanation as to why you are adjusting the PP 1099 amount.

If you didn't do that, expect a letter when the mismatch is found.
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Old 08-13-2016, 09:31 PM   #32
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I agree. The penalty and interest shouldn't start until you are notified.

Sorry, but that is not how it works.... you, the taxpayer, are responsible for reporting ALL your income even if you are not notified from the payer.. so, since the OP did not put it down it starts from that time frame...


Now, I am surprised that some people are being notified 5 years later... that does seem a little late...
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Old 08-13-2016, 10:08 PM   #33
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Sorry, but that is not how it works.... you, the taxpayer, are responsible for reporting ALL your income even if you are not notified from the payer.. so, since the OP did not put it down it starts from that time frame...


Now, I am surprised that some people are being notified 5 years later... that does seem a little late...
That was actually a situation where I was sent a letter after about three years. I responded with information showing that they were wrong, and *never* heard back, or so I thought. Two years later I got a letter that was pretty much a duplicate of the first one, although with much higher penalties and interest. I again responded with documentation showing that they (the IRS) had their heads up their ass, and never heard from them again. Of course it's only been about 15 years. The next letter could show up any day.
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Old 08-14-2016, 06:07 AM   #34
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Considering the amount I'd ask for a reduced settlement (can't hurt to ask) and ask about making payments or something. They can't shoot you for asking and you never know.
Not sure what I would base that on, how it works, or what the impact is later? Ever done that or heard of someone doing it? I'm interested. This puts a damper on my post tax savings for sure.

And in advance for those "philanthropic" types, I'm just asking....
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Old 08-14-2016, 06:20 AM   #35
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I just got hit with a $25 fine for not filing a local earned income tax return last year...I didn't file because I had no earned income since I'm retired. What a scam!


Enjoying life!

Why would you have to file a return if you didn't have to pay any tax? When I have issues with our local arcane taxes, which I don't fully understand, I go to the local office in person. Sometimes they make mistakes. Maybe they thought you had earned income. It's worth a try.

Heck my DS had an issue with the IRS this year and he went to the office to straighten it out. The lady was super nice and said she'd never had this problem before. She had to call someone else to walk her through the computer fix. She knew he was right all along, and they spent a cheery hour chatting while she fixed the problem.

Last week I went in to straighten out an earned income tax that I failed to pay because it was taken out of my paycheck until last year. So I paid last year's and this year's tax. The representative told me to go on the county's website next year and to inform the county I won't be paying that tax anymore.


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Old 08-14-2016, 06:52 AM   #36
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It is normal for the IRS to take a year or two to catch errors. If they assessed you a penalty for not reporting the income you can ask for a waiver of the penalty. You are stuck with the interest. Be sure to amend your state return. They will not be far behind.
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Old 08-14-2016, 07:02 AM   #37
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It is normal for the IRS to take a year or two to catch errors. If they assessed you a penalty for not reporting the income you can ask for a waiver of the penalty. You are stuck with the interest. Be sure to amend your state return. They will not be far behind.
I will call them and ask. The penalty is 4 times the interest!
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Old 08-14-2016, 07:07 AM   #38
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I had the IRS send me a letter last year looking for more tax and penalties on a 2013 return. What was frustrating to me is that they were wrong on all accounts and it took 3 letters and a phone call from me to get them to realize their errors.
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Old 08-14-2016, 07:13 AM   #39
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I had the IRS send me a letter last year looking for more tax and penalties on a 2013 return. What was frustrating to me is that they were wrong on all accounts and it took 3 letters and a phone call from me to get them to realize their errors.
I wish they were wrong, but my fault. Maybe as some have suggested they will help out with the penalty.
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Old 08-14-2016, 07:39 AM   #40
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Not sure what I would base that on, how it works, or what the impact is later? Ever done that or heard of someone doing it? I'm interested. This puts a damper on my post tax savings for sure.

And in advance for those "philanthropic" types, I'm just asking....
Google the stats on how many tax settlements actually are payed off. I'd respond by saying there was some confusion about the 1099 and that you actually didn't have a paper copy of it in your possession. Admit it was a mistake and ask if there is anything they can do to help you get this settled. Maybe they will forgo the interest, maybe they will let you make interest free payments for several years. But you won't know until you ask them.Jusy say that's a lot of money and I could use some assistance.
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