Frustration on resolving IRS penalty notice

[aja8888]

In early 2017, I filed a 5500 EZ tax return (two page return) to close out my SOLO 401k (the first required and Final return). No taxes were due to the low amount in the plan. The filing is a matter of closure notification of the plan.

Two years later (early 2019), I received a letter from the IRS saying I did not file the final 5500 EZ return. I called my CPA, who was recovering from a stroke, and he said just write the IRS a letter explaining I filed the return and enclose a copy of the return. BTW, I have a U.S.P.S. return receipt, certified mail, that indicates they received the original 2017 5500 EX Tax Return mailing.

A few months pass and I get a penalty notice for $15,000 from the IRS (form letter!). I get my CPA on the line and we call the IRS office and speak with an agent. Agent verifies the 2017 sent return is not in their computer. She (the agent) suggests we send a letter explaining everything and file another Final return. We do that.

A few months later (it’s now February 2020 - Covid hits) I get another penalty notice. I call the IRS again and reach a person who says send another letter, attach everything, and wait as the offices are shut down due to the pandemic. So I craft another letter, put copies of the earlier letters with it and the rest of the documentation.

Time goes on and I continue to get computer generated penalty notices adding on interest, I call the IRS again in January 2021 and reach another agent who I believe is working from home. We have a candid, long talk and I repeat everything the last two agents told me to do. I specifically asked if my certified letters or explanation are on file. He asked me where I sent them to and I said the address on the notices where I was required to send them to. Now comes the good part…

He says the letters probably went into a “room in another building” and probably have not been read and may never be read (!!!). I asked him what I have to do to get this issue resolved. His answer was to put together a FAX and send it in as someone will probably read it. So I did that and now it’s August and today I got another penalty letter with updated interest added.

My CPA died Easter Sunday and I have no clue where to go, who to see, or what else to do to get this resolved. I would at least like the IRS to read what I have sent in many times and have the courtesy to respond to my documented claim of me mailing the return.

Questions I have for this knowledgeable and experienced group:

1. Is there an “IRS advocate” I can seek out to get help with the closing of this issue?

2. Does it make sense to seek out another CPA to work with me on this? I am the “Plan Administrator” and really the key guy. My past CPA said I should be able to clear this up with no other help, although he did advise me and that has not worked so far.

3. What other suggestions can I get from this group?

Thanks in advance.

 

[SecondCor521]

1. https://www.irs.gov/taxpayer-advocate

2. Dunno.

3. Perhaps your Congressional representatives can assist you.

 

[aja8888]

1. https://www.irs.gov/taxpayer-advocate

2. Dunno.

3. Perhaps your Congressional representatives can assist you.

Thanks, since their offices are all closed, I can file the 911 Form and wait. But it's a start.

 

[ERD50]

Last year I had trouble straightening out a minor issue with the IRS (only a couple hundred involved) for my MIL's final 1040/1041.

IRS was backlogged, could not get through the phone lines. Would be on hold hours, being reminded to stay in line every 5 minutes or so, then after ~ 3 hours "Sorry, we cannot take your call. click!".

This went on for weeks. Finally got through by repeat calling starting a few minutes before they open in my time zone.

I finally found a number for a taxpayer advocate group. Listened to a 2 minutes message, leave your number, and then "message box full".

Adding insult to injury, as you are finding, they are slow to process things, but the "we are going to place a lien on your home/accounts" letters seem to have no problem getting out on time. Geeez, if you are backed up, give some relief on the collection side as well!

-ERD50

 

[deserat]

.....

3. Perhaps your Congressional representatives can assist you.

I second the Congressional. I had an issue with VA and went through several letter writing and contacts rounds as well. I finally got fed up and contacted my senator. It took them a month to say they would take it, but they did and I'm fairly sure because I had it well documented and was an easy win for them. Thirty (30) days later, it was resolved to my satisfaction with a letter from the VA, a payment to the entity in question and an email from the senator.

It sounds like you have your ducks in a row and this would be a slam dunk for the senators' citizen advocacy office who usually handles these types of cases. What I found is these offices have the different federal agency quasi 'ombudsman - fix the problem' offices on speed dial and they have the ability to cut through the red-tape quickly and get a resolution. In your case it would be a note in your file to consider the matter resolved and 'shut off the auto-reminder with updated interest letters.'

Let us know if you go this route and if it worked. I offer my story above to give at least one anecdote of getting some headway on these intransigent bureaucratic problems with federal agencies.

Edited to add: I did all of this via email as I currently live overseas. It was with Senator Rubio's office - they love helping veterans, I guess. However, I frankly flipped a coin on which senator I was going to contact and would have gone through all of them and my congressional rep if I did not get my issue fixed.

 

[PaunchyPirate]

Thanks, since their offices are all closed, I can file the 911 Form and wait. But it's a start.

Are you sure their offices are closed? Here is a link of Texas' offices and many of them are open.

https://www.irs.gov/help/contact-my-local-office-in-texas

I am dealing with a multi-year IRS issue for my mother. I was able to call in July and schedule an appointment for September 9th at the office that is 45 miles away from me. So, yes, you won't get an appointment tomorrow, but you should be able to see people. Unless they decide Covid has forced them to close all offices again.

 

[cathy63]

Thanks, since their offices are all closed, I can file the 911 Form and wait. But it's a start.

Try the "Tax Assistance Center" nearest you in addition to the "Taxpayer Advocate Service". I think you should be able to bring copies of all your documentation to the TAC and have it added to your file. I'm not sure if they can actually resolve the issue right then, but at least getting the docs in the file would be an improvement. If the TAC is unable to resolve the issue, then you can also submit Form 911 to them and that will get the TAS involved as well.

 

[UnrealizedPotential]

If it was me and I had this Issue. I would be seeking out another CPA asap. I would not hesitate on that. I would gather all the information up and tell the CPA you need help right now. You are paying them to figure out how to deal with the IRS. Waiting only makes it worse. Just my opinion.

 

[ExFlyBoy5]

I agree on the congressional inquiry. A tax attorney may not be a bad idea, either.

 

[aja8888]

Try the "Tax Assistance Center" nearest you in addition to the "Taxpayer Advocate Service". I think you should be able to bring copies of all your documentation to the TAC and have it added to your file. I'm not sure if they can actually resolve the issue right then, but at least getting the docs in the file would be an improvement. If the TAC is unable to resolve the issue, then you can also submit Form 911 to them and that will get the TAS involved as well.

Thanks for all the suggestions so far.

Tried to call the local office(s) for tax assistance today. No one is taking calls all day. I tried all Houston offices multiple times during the day. I suspect the offices are not manned due to Covid. The recorded message is to keep calling at different times and days. Right! I'll try again Monday.

I am hiring another CPA but at some point, the fine will be cheaper than the CPA. My last CPA who was a Senior Tax Partner at KPMG Peat Marwick in a previous life (he was retired in private practice), said that they have no special ways to contact the IRS on this matter outside of what I (we) have already done and they will just prepare the same letters which I will review. Also, since I am the Plan Administrator, I have the authority to deal with the IRS on this issue. We are done with new letters and faxes since no one is reading them as I was told that.

I suspect this issue also has to do with the huge backlog of mailed in items at IRS offices reported earlier this year (11 million unopened mailings).

One unfortunate thing about this issue is that only the Ogden, UT office handles SOLO 401K returns and other similar retirement plans and that area is pretty small compared to the overall scheme of things.

This is like living in a third world nation when dealing with the Gov these days.

 

[PaunchyPirate]

Thanks for all the suggestions so far.

Tried to call the local office(s) for tax assistance today. No one is taking calls all day. I tried all Houston offices multiple times during the day. I suspect the offices are not manned due to Covid. The recorded message is to keep calling at different times and days. Right! I'll try again Monday.

I am hiring another CPA but at some point, the fine will be cheaper than the CPA. My last CPA who was a Senior Tax Partner at KPMG Peat Marwick in a previous life (he was retired in private practice), said that they have no special ways to contact the IRS on this matter outside of what I (we) have already done and they will just prepare the same letters which I will review. Also, since I am the Plan Administrator, I have the authority to deal with the IRS on this issue. We are done with new letters and faxes since no one is reading them as I was told that.

I suspect this issue also has to do with the huge backlog of mailed in items at IRS offices reported earlier this year (11 million unopened mailings).

One unfortunate thing about this issue is that only the Ogden, UT office handles SOLO 401K returns and other similar retirement plans and that area is pretty small compared to the overall scheme of things.

This is like living in a third world nation when dealing with the Gov these days.

I assume you are using this number? 844-545-5640

It is the same number for all those offices on that page I sent you. They use a common call center to schedule an appointment in all those offices. That is how it worked for me in Pennsylvania. So calling the individual offices probably isn’t going to work.

And yes, unfortunately you still must navigate thru the wait times, and possible “we are too busy to take your call right now” disconnects.

I generally have had to wait 45-60 minutes before getting thru to a person IF I’m lucky enough to get thru to a person. As they say, keep trying. Try at different times. I’ve had to try multiple times over multiple days when I needed to call.

It’s all you can do for this part of the effort.

 

[aja8888]

I assume you are using this number? 844-545-5640

It is the same number for all those offices on that page I sent you. They use a common call center to schedule an appointment in all those offices. That is how it worked for me in Pennsylvania. So calling the individual offices probably isn’t going to work.

And yes, unfortunately you still must navigate thru the wait times, and possible “we are too busy to take your call right now” disconnects.

I generally have had to wait 45-60 minutes before getting thru to a person IF I’m lucky enough to get thru to a person. As they say, keep trying. Try at different times. I’ve had to try multiple times over multiple days when I needed to call.

It’s all you can do for this part of the effort.

Yes, thanks...had no wait times. The message just said try again. But, I'll try again Monday as I know Friday is a bad day to call ANY government office.

 

[jazz4cash]

I did taxes for a relative and eFiled using TurboTax. I used her home address but IRS sent a notice to our address. I can’t fathom how IRS would associate her return to our address. I suspect it has something to do with the TT registration info. The notice says she MUST verify her identity before they will issue her refund. She called the number in the notice and a recorded message stated no need to proceed based on a code in her notice. WTH.

 

[aja8888]

I did taxes for a relative and eFiled using TurboTax. I used her home address but IRS sent a notice to our address. I can’t fathom how IRS would associate her return to our address. I suspect it has something to do with the TT registration info. The notice says she MUST verify her identity before they will issue her refund. She called the number in the notice and a recorded message stated no need to proceed based on a code in her notice. WTH.

Jazz, as far as I am concerned the entire IRS is offline and working from home. If you do get an agent like I did a few times during this two year adventure, it's a low paid drone that works off a script. If you have a "problem" like I have been blessed with, the standard answer is to "send in a nice letter", which never gets read. Every three months I get a computer generated and sent letter asking me to send in the money.

 

[EastWest Gal]

5 years ago we had to resolve an IRS issue. Could not get through on the phone at all. But we went to the local office and had to wait a bit but they were very competent and helpful.

You may actually need to visit an IRS office to find out if it is open.

 

[aja8888]

5 years ago we had to resolve an IRS issue. Could not get through on the phone at all. But we went to the local office and had to wait a bit but they were very competent and helpful.

You may actually need to visit an IRS office to find out if it is open.

Thanks for the reply, I had that thought about visiting one next week if the phone is still on "please call back someday".

 

[jazz4cash]

I’d be a nervous wreck if this drags on for two years. I also have a real issue with an errant 1099R submitted by the bank and conflicting IRS notices. We spoke to someone from the office that issued the notice but she said she couldn’t help. I never knew about the taxpayer assistance centers before this thread so I think I’ll see If I can get an appt. Thanks

 

[sweetana3]

Worked in the Taxpayer Advocate's Office for 15 years. However retired for 13.

1. Write out in clear unemotional language the time line and what you did and have done. Pretty much what you have above. In the first and last paragraphs put what you need, removal of a penalty..... Include copies of what correspondence you have recd to clearly identify the account and issue.
2. Send to the Taxpayer Advocate's Office and to your local Congressional Office. Do this to both your local Congressperson and Senator.

You can call but the specialty of your issue and unit might require a referral. I used to work on Congressional inquiries and if they send it to us, it gets worked.

Now remember my info was 13 years ago but they did take those types of inquiries seriously because funding depends on keeping those Members happy.

 

[aja8888]

Worked in the Taxpayer Advocate's Office for 15 years. However retired for 13.

1. Write out in clear unemotional language the time line and what you did and have done. Pretty much what you have above. In the first and last paragraphs put what you need, removal of a penalty..... Include copies of what correspondence you have recd to clearly identify the account and issue.
2. Send to the Taxpayer Advocate's Office and to your local Congressional Office. Do this to both your local Congressperson and Senator.

You can call but the specialty of your issue and unit might require a referral. I used to work on Congressional inquiries and if they send it to us, it gets worked.

Now remember my info was 13 years ago but they did take those types of inquiries seriously because funding depends on keeping those Members happy.

Thanks for the advice. If I can or I can't get an in person meeting with Taxpayer Assistance, I'll sent the documents to all parties. Besides the notices I have received, should I include copies of the letters and attachments I have sent the IRS in the mailing out?

For the mailing to the parties, should the cover be the Form 911?

 

[Steeler75]

Friday is the best day to contact IRS

Been dealing with the IRS over the past 4 months. They never allocated my Q4 estimated tax payment for 2020 and said I owe $10k plus penalties and late fees. Also receive the monthly update on addition accrued penalties and threats of confiscation and liens.

Best time to get through on the phone is Friday morning or after 3pm local. Only time I’ve been able to get through the phone tree to talk to someone. Have sent in my replies via certified mail with copies of transaction confirmation and bank statements that illustrate payment was made.

Last phone contact finally made some progress, the money was found in excess tax payments due to a transposed number in my SS. Contact couldn’t issue any validation or email confirming that the payment was made either, just, call back in a few weeks to confirm. Huge pain in the butt.

 

[aja8888]

Been dealing with the IRS over the past 4 months. They never allocated my Q4 estimated tax payment for 2020 and said I owe $10k plus penalties and late fees. Also receive the monthly update on addition accrued penalties and threats of confiscation and liens.

Best time to get through on the phone is Friday morning or after 3pm local. Only time I’ve been able to get through the phone tree to talk to someone. Have sent in my replies via certified mail with copies of transaction confirmation and bank statements that illustrate payment was made.

Last phone contact finally made some progress, the money was found in excess tax payments due to a transposed number in my SS. Contact couldn’t issue any validation or email confirming that the payment was made either, just, call back in a few weeks to confirm. Huge pain in the butt.

Well, at least you are making progress. Everything I have sent in during the past two years has not been read by anyone from what I can tell. Covid shutdowns caused a part of this though.

 

[Montecfo]

I have dealt with many frustrating issues such as this with IRS. I do not think you need a tax attorney or a CPA. You have all the facts in your side.

I thought Cathy had a good idea above. But in addition, i would keep responding to each and every letter, noting and attaching copies of prior correspondence as appropriate.

I would send all correspondence via FAX and FEDEX. And keep calling. Eventually it will be solved when you get someone who cares enough to solve it.

Copying your Congressman on the letter might help.

I dealt with a series of payroll tax notices alleging hundreds of thousands of dollars of underpayments plus penalty and Interest. It took probably 18 months after I got it to resolve it (issue was 5 years old).

What finally resolved it? I messengers a tabbed binder with all prior correspondence to the IRS office listed on latest notice. It was a file about an inch and a half thick. Cover letter asked them to call me upon receipt.

They do not get packages like that all the time, so it got attention. A lady called me and a few weeks later it was resolved. That is what you want.

You will run up a crazy bill with CPAs and tax attorneys for a clerical task. I would not do that.

Good luck.

 

[aja8888]

I have dealt with many frustrating issues such as this with IRS. I do not think you need a tax attorney or a CPA. You have all the facts in your side.

I thought Cathy had a good idea above. But in addition, i would keep responding to each and every letter, noting and attaching copies of prior correspondence as appropriate.

I would send all correspondence via FAX and FEDEX. And keep calling. Eventually it will be solved when you get someone who cares enough to solve it.

Copying your Congressman on the letter might help.

I dealt with a series of payroll tax notices alleging hundreds of thousands of dollars of underpayments plus penalty and Interest. It took probably 18 months after I got it to resolve it (issue was 5 years old).

What finally resolved it? I messengers a tabbed binder with all prior correspondence to the IRS office listed on latest notice. It was a file about an inch and a half thick. Cover letter asked them to call me upon receipt.

They do not get packages like that all the time, so it got attention. A lady called me and a few weeks later it was resolved. That is what you want.

You will run up a crazy bill with CPAs and tax attorneys for a clerical task. I would not do that.

Good luck.

It is just literally astounding how the IRS ignores citizens that are trying to resolve issues. It's no wonder the crooks get away with filing false tax returns, not paying taxes, etc.

My CPA that passed away that was helping me was my SIL's husband who had been dealing with the IRS in California for years on large corporate accounts in Silicon Valley. He told me before he passed away that even dealing on that high a level was no different than what I am going through. Since we were family, he was helping me free gratis.

 

[aja8888]

UPDATE: There is a GOD!

This is an update to my ongoing 2.5 year IRS communications on trying to get the IRS to acknowledge that I, in fact, filed a timely 5500 EZ Tax Return in 2017 when we closed our SOLO 401K. Also I am asking that they waive the $15,000 penlty.

Numerous letter, calls, faxes, agent discussions, etc had led me to make this thread (looking for advice) and eventually the advice led to my filing a complete set of correspondence documents in September with the local IRS Tax Advocate service.

Note: I was not able to reach the local IRS Tax Advocate service by phone ever since I stared calling in September. I couldn't even leave a voice message so I gave up after a couple of weeks of calling. Because of that, I was not able to make an appointment to see them in person. Actually, I have not heard back from the advocate service as of yet, although I have a return receipt indicating they received the documents I sent them.

What worked:

In February, 2021, I spoke with an agent on a random call I made since the pandemic was still going on and he advised me to send a facsimile that contained a minimum of information (short letter) and copies of the first return and postal return receipt. He provided me a FAX number and I sent the package off. Silence for months........

Today, I received a one page letter from the IRS acknowledging the fact that I sent in a timely tax return and saying that the fine and interest charges are waived. They also apologized for my inconvenience. This was in response to the Fax of February 2021.

Well, that was good news!

 

[jollystomper]

That's great! Glad that, after all that time,pain, and inconvenience, this adventure is over.