Merry Christmas from the IRS anyone else get the joy?

[Happyras]

So, today in my USPS informed delivery email I saw two letters from the US Treasury. Could it be relief checks for both my DW and I?

I patiently waited for the mail to arrive, and got the early XMAS gift this afternoon from the IRS. No, we make way too much $$$$ for any relief check) but they were nice enough to send us each a SECOND notice (first one never seen) that we owe nearly $1K for 2019 and its due with interest by Dec 31 or else!

I spent the next few hours trying to figure out why, it looked like we paid exactly how the accountant said to, including reducing our last payment by $407, as the IRS said in an April letter that we did not owe an underpayment penalty. There was nothing in the demand letter from the IRS as to why.

I finally dug into the IRS site and was able to download an account record which shows what we paid, and what the IRS thought they refunded, and new penalties for not paying on April 15th even though we did final payment as per law on July 15th this year.

Bottom line, for $1K bucks I will likely not argue with them and evoke some evil costly audit. I did find a check from May that we thought was a mis-applied relief check and did not cash (shame on me, the IRS assumes you did anyway), it was the $407 they show paid to us. In April, we had scheduled a final payment for July per our accountant through EFTPS, but we did not see that the tax return she filed had payment instruction to pull from our low balance Chase account in error. The IRS tried to steal the money on April 15th, even though it was not due until July 15th per law. When unsuccessful, they assessed a sc#@ U penalty. $535 is pretty high for their own error.

Merry Christmas eve, way to go IRS you were even able to ruin this day too!

 

[W2R]

Sorry you are going through this!

Bottom line, for $1K bucks I will likely not argue with them and evoke some evil costly audit.

That's what I would be thinking, too. In life we have to pick our fights, and fighting with the IRS for $1K is just not worth it.

Hope you can let this go mentally, and manage to salvage your Christmas to some extent.

 

[Poopycat]

I have to pay taxes to the state of Montana for mineral rights. It’s frustrating to pay taxes to a state where I’ve never lived! Worse yet, it seems like every year the state disagrees with my accountant’s calculations and typically the difference is in Montana’s favor. I just pay the difference. It’s a small amount and I just don’t like to get in trouble with any tax authority.

I did argue an IRS request for additional tax money but my accountant got involved on that one. I had paid taxes on my trust account instead of my personal account so it was just a net zero mistake, and the bill was several thousand dollars so it was definitely worth getting it straightened out. But in general, I don’t mess with tax authorities.

 

[ivinsfan]

Isn't this why you actually pay an accountant? No way I'd just write them a check.

 

[Bigdawg]

three years ago when I sold my San Diego house the state of California asked for an additional 20k and some change. Told me my calculations were wrong. I didn't want to fight that one plus I made a killing on that house so I sent them a check. Three weeks later they sent me a check for 20k and some change. It wasn't exactly what I sent them but close. Surprised they figured it out so fast.

Back in the 90's when I contributed to my first IRA there was an issue with my taxes. The IRS guy from San Fransisco said I was off on my calculations by $1937. Sort of weird because $1937 was the exact amount of my IRA contribution. I fought and won that one. Today I try to keep things off of their radar.

 

[Happyras]

Thanks for everyone's support and comments. I think I owed the first penalty which they said I did not in April, so this is definitely not a battle I even know how to play.

Merry Christmas!

 

[ziggy29]

So, today in my USPS informed delivery email I saw two letters from the US Treasury. Could it be relief checks for both my DW and I?

I patiently waited for the mail to arrive, and got the early XMAS gift this afternoon from the IRS. No, we make way too much $$$$ for any relief check) but they were nice enough to send us each a SECOND notice (first one never seen) that we owe nearly $1K for 2019 and its due with interest by Dec 31 or else!

Wow, that sucks. I'd agree that if you can afford it, this isn't an amount that is worth fighting the IRS for, though I'd want answers from my accountant.

But shouldn't the IRS be sending something like this by certified mail? When I was a postal clerk, we saw certifieds from the IRS coming in many times.

 

[Happyras]

Wow, that sucks. I'd agree that if you can afford it, this isn't an amount that is worth fighting the IRS for, though I'd want answers from my accountant.

But shouldn't the IRS be sending something like this by certified mail? When I was a postal clerk, we saw certifieds from the IRS coming in many times.

Yes this makes me worry the accountant is not so good, but I generally check her work and missed the payment was filed with the return.

As for the mail, I was really mad that it was supposed to be second notice, but the only notice I had earlier was to pay less and no penalty! Maybe they send a 3rd notice certified?

 

[Montecfo]

Yes this makes me worry the accountant is not so good, but I generally check her work and missed the payment was filed with the return.

As for the mail, I was really mad that it was supposed to be second notice, but the only notice I had earlier was to pay less and no penalty! Maybe they send a 3rd notice certified?

Well, hard to say where the mistake is. Could be IRS.

I certainly would not just pay some assessment I could not explain, but that's just me.

 

[Texas Proud]

I would never pay the IRS or a state $20,000 for an error they make... nor even $1,000...


It is worth my time to fight it for that much... will not take that much time...


So far I have never lost one that I knew I was right...

 

[cathy63]

I don't see an IRS error here, but there may be an error by your accountant.

You filed a tax return where you told them to withdraw funds from your Chase account on April 15. They were very explicit back in the spring that the new July dates would not apply to previously scheduled transactions and if you wanted to reschedule your payments you had to call them. As it is, they followed the exact payment instructions you provided and the transaction failed. That is not stealing, and it's not their fault you didn't know what your accountant put on your tax returns.

Even if you did pay 100% of your 2019 taxes by July 15th, then it's possible you could still owe an underpayment penalty if you hadn't paid your estimates proportionally when the income was received. If you did pay in a timely fashion throughout the year, and the only reason the IRS is penalizing you now is for the failed April 15 transaction, then you have a strong case for asking the IRS to waive the penalty. A simple letter should laying out actual payments made vs amount owed at each date would probably be sufficient. I would say that your accountant should write that letter since she's the one who told them to pull the funds from your Chase account.

 

[grayv]

I have to pay taxes to the state of Montana for mineral rights.

for rights only, or income from the rights?

 

[GalaxyBoy]

The only time I got one of those letters from IRS they were dead wrong about something not very esoteric. Actually, when I called, the issue they gave me was different from what was in the notice, so I wasn't prepared to discuss it. So I did my homework and called back; then it was a different issue. Eventually they told me the problem was I did a partial deduction for a tIRA contribution but the W-2 had "retirement plan" checked. They said that meant I couldn't deduct any of my contribution. AHA! I knew my stuff on that one. So I had to step them through what was in the 1040 instructions, including the worksheet for deductions phased out based on income, and how my numbers were exactly correct. Sheesh, don't they even train these people beyond a 1040EZ?

 

[Happyras]

I don't see an IRS error here, but there may be an error by your accountant.

A simple letter should laying out actual payments made vs amount owed at each date would probably be sufficient. I would say that your accountant should write that letter since she's the one who told them to pull the funds from your Chase account.

Thankyou, this is very clear. The devil is in the details, and I went round with the accountant in April via email as to what to do. The rejected payment by Chase due to ISF was her idea, and she further directed me to deduct the $407 penalty from my final payment in July. Since the IRS issued a "refund" check at the end of April I mis-interpreted it as a short paid stimulus check and did not relate it to the issue.

Apparently, the underpayment penalty my accountant calculated for filing the return was denied by the IRS (we did not owe due to some change in calc rules). In the end of all of this I tracked down the "refund" check. So net-net in the eyes of the IRS we had a penalty only for ISF from the bank. Now most folks would charge maybe a $25 fee for a bounced check, but the IRS charges $535? I guess I am lucky they did not charge another penalty for the short payment in July of $407, or maybe that is in the interest charged.....

 

[ivinsfan]

Why haven't you dumped this entire mess in your accountants lap? FIY you would have had a written notice clearly telling you if something was a stimulus check.

I'm not paying an accountant and then extra 535 bucks without squeezing the accountant for an explanation.