Trouble from 2019 Tax return

[Venturer]

Earlier this year we received a notice cp2501, from the IRS that our tax return didn't match what was on file. It said that we should complete a response form and return it. The problem was as we found out after calling the IRS phone number listed. We had 2 IRA CD's which had matured so we got the checks from Synovus, and carried them across town to Wells Fargo and deposited them. It turned out that some one at WF miscoded the deposits as transfers instead of IRA rollovers. It took them a bout 3 weeks to get us the corrected paperwork to submit. We faxed these in along with our response in mid July. We heard nothing until last week when we got another notice CP2000 which was a proposed amount due of $ 28k plus a substantial tax penalty of $5705 & interest of $1364. Again there is a form included to give my response. Once again I called the included 800 # to make sure we were doing it right. Suprise suprise, it doesn't matter if you fax or mail your response to the notices the all get put in a big pile and are handled as they can get to them & they have no record of receiving our previous response. This "agent" told me to fax it all including both responses, then give 3 to 4 days and call in again to see if they have it we faxed it last thursday and called in yesterday. Nope they don't have a record. He was frankly an a$$ about it and just kept saying because of the current on going situation every thing was back logged and I would have to be patient. But the thing is he is not the one getting more and more interest added. I'm just flustered because the form stated that the $35k is due by November 3rd. I just want to get this fixed and move on, I never had any dealings with IRS before. I'm not a tax cheat and all this is a clerical error! Rant off thanks for listening.

 

[finnski1]

Well I obviously have no advice but just wanted to commiserate with you. That just sucks!

 

[Ncc1701]

Take the 1099R and proof of deposit within 60 days and continuously send it to them until they get sick of it. That's what I would do.

Your experience can help others. In the future, never take possession of an IRA check, always go to the gaining firm and have them initiate a transfer. You did an "indirect transfer" which you are only allowed to do once per year and now you know why the IRS has that limitation. Always do a "trustee to trustee" transfer.

 

[cathy63]

You could try contacting the Taxpayer Advocate Service. They may be able to help. https://www.irs.gov/taxpayer-advocate

 

[mystang52]

I don't know if this will help, but may also be worth a try. Next time you send the proofs, include a cover note with Bullet points showing what occurred, in sequence. Each bullet should be very short and sweet. e.g.,

• "IRA CD's matured January 1, 2019."
• "Transferred proceeds January 2, 2019 to my Wells Fargo IRA."

etc.

Final bullet:
" Therefore, this was merely an IRA rollover AND NO TAXES OR PENALTY ARE DUE"

Oh, one other suggestion: contact your local Congressman for help.

 

[Montecfo]

Yes, you have to spoon-feed them. Rinse and repeat. Make it as easy as possible.

 

[rk911]

Take the 1099R and proof of deposit within 60 days and continuously send it to them until they get sick of it. That's what I would do...

this ^^^^^

 

[pb4uski]

They are very backlogged. For some reason this year, DS had to file by paper. We filed in mid-May as I recall and his refund didn't hit his bank until mid-September.

The guy is right... be patient.

 

[RobbieB]

Yeah, it's not the guy sending you all this grief, it's the computer.

 

[jazz4cash]

I have a similar issue for 2020 return. We initiated a direct transfer at the receiving institution but the sender mis-coded the 1099. It was actually a non reportable transaction and no clear procedure to correct a 1099 that never should have been issued. The form required to report a 1099 error had to be paper filed. The only satisfaction we got was from the Taxpayer Advocate. She couldn’t really help but she said they have backlog going back years, esp paper returns.

There’s just no way IRS can track all these IRA and 401k transactions and the rules to fix the inevitable errors font work.

 

[ERD50]

Yeah, it's not the guy sending you all this grief, it's the computer.

Yes, but if the IRS is backlogged, they ought to reschedule their computers on sending the threatening letters.

I had a minor hiccup in the paperwork from MIL & FIL final 1040/1041s. I had trouble ever getting through to the IRS on their phone line, which was the only option they gave.

Then I start getting threatening letters about freezing our accounts, and we were looking into selling/buying a home at the time - I didn't need this.

When I did finally get through, the person seemed knowledgeable and helpful (but not in any particular rush!), but the problem wasn't fully resolved, and I was getting more threatening letters, with 30 day 'final' notices. Got through again after many attempts. Second guy was also helpful, but he actually referred to those letters as 'scare letters', and kinda blew them off.

Well, I wasn't going to argue with him, but it really got me PO'd that the IRS is so cavalier about threatening their citizens who are actually trying to straighten out their tax situation, and have paid all taxes due.

Anyhow, best time for me to get through was Fridays AM, start calling just before the offices open in your time zone.

-ERD50