Contacting the IRS to dispute a 1099R

[Ready]

I'm dealing with an ongoing issue where a former employer issued me a 1099 claiming they distributed funds from my 401K in 2020. It was an attempt to correct a plan error regarding an excess contribution. I believe the 1099 was in error. I have had some limited communication with the company in an attempt to get them to correct it but at this point they have refused to respond to any further communication from me. I do have an email from their attorney stating they will issue a revised 1099R but that was over a month ago and they've gone silent on me since that email.

So now I'm attempting to go through the process to dispute the 1099R with the IRS. In reviewing form 4852 it instructs me to call the IRS for assistance. However, when I call I'm either greeted with a generic message saying they can't answer my call at this time due to high call volumes, or I get to an automated attendant which never gives me the option to speak to anyone.

Does anyone have any suggestions on how to actually get a live person at the IRS to begin the dispute process? Alternately, could I just fill in form 4852 and submit it with my tax returns? The form says to wait until the IRS sends the form to me but if I can't get anyone to answer the phone I'm not sure how to accomplish that.

Thanks for any suggestions!

 

[freedomatlast]

800-829-0582 ext 652

 

[Ready]

800-829-0582 ext 652

Thanks! I tried it but still got the “due to extremely high call volume we are unable to answer your call at this time, please try again on another day” message. But I will keep trying. What department am I calling?

 

[freedomatlast]

It's a number for general tax questions. I called this number this morning and got through with about a 40 minute hold time.

 

[ocean view]

File form 4868 to extend your filing date to October 15, then wait until after May 17th, the special filing date, to call the IRS. Call volumes will be down after that date. If you are in a western time zone, get up early to call during their first open east coast hours.

Remember that if you file an extension, you still need to pay in your expected tax amount by the original deadline. You will probably want to extend your state as well.

Btw, the extension form will ask for a reason why you need more time. No need to go into specifics. We always used “additional time is required to file a complete and accurate return”.

Good luck

 

[rothlev]

this works

 

[Ready]

I was able to get through this morning and speak with an agent. Thank you very much @Freedomatlast for that phone number. That definitely did the trick.

In the end, while I spent an hour on the phone with the agent, it didn’t really accomplish anything. She told me to disregard the instructions on form 4852. The instructions say to call the IRS to request assistance, provide them with information about the disputed 1099R, and then wait for them to send me form 4852. Instead this agent told me to just download form 4852 from the website and send it in with my tax returns, and that will initiate the process to send an inquiry to the employer for additional information.

At this point I believe my former employer has no intention of having any further conversation with me. They have ghosted me for over a month now. But I do have an email from them stating they will issue a revised 1099R. So I’m going to include that as documentation with my tax return to demonstrate that I made a good faith effort to resolve the issue with the employer before resorting to using 4852 to dispute the 1099.

Does anyone see any potential downside to pursuing this strategy?

 

[SecondCor521]

^ Nope.

However, I would only include the employer email with your tax return if the IRS specifically requests it. Sending them exactly what they require, no more and no less, is the way to maintain the most cordial relationship with the IRS IMHO.

In a brief review of Form 4852 I don't see the IRS asking you for that email, so I would not include it in the return. I would keep a copy of it for my records, though.

 

[jazz4cash]

I got a 1099r for an IRA trustee to trustee transfer which should’ve been non reportable. I didn’t notice the problem until I did my taxes this weekend. I can’t find any way to Handle this. The small local bank that issued the 1099R says they will send me a letter. I already have a 60 day rollover so I really need this transfer to be non-reportable. These IRA transfers are a royal PITA. I’m having an issue on 1 out of 3 lately.

 

[Ncc1701]

In the end, the bank is going to have to issue a corrected 1099. File a complaint with the federal reserve and make sure the bank president is aware of it.

 

[pb4uski]

I was able to get through this morning and speak with an agent. Thank you very much @Freedomatlast for that phone number. That definitely did the trick.

In the end, while I spent an hour on the phone with the agent, it didn’t really accomplish anything. She told me to disregard the instructions on form 4852. The instructions say to call the IRS to request assistance, provide them with information about the disputed 1099R, and then wait for them to send me form 4852. Instead this agent told me to just download form 4852 from the website and send it in with my tax returns, and that will initiate the process to send an inquiry to the employer for additional information.

At this point I believe my former employer has no intention of having any further conversation with me. They have ghosted me for over a month now. But I do have an email from them stating they will issue a revised 1099R. So I’m going to include that as documentation with my tax return to demonstrate that I made a good faith effort to resolve the issue with the employer before resorting to using 4852 to dispute the 1099.

Does anyone see any potential downside to pursuing this strategy?

^ Nope.

However, I would only include the employer email with your tax return if the IRS specifically requests it. Sending them exactly what they require, no more and no less, is the way to maintain the most cordial relationship with the IRS IMHO.

In a brief review of Form 4852 I don't see the IRS asking you for that email, so I would not include it in the return. I would keep a copy of it for my records, though.

+1 Rather than attach the email you can simply include on line 10 that "I made numerous efforts to obtain a corrected 1099R from [former employer]. On [date] I received an email from [sender] of [former employer] stating that they would issue a revised 1099R but they failed to provide a revised 1099R prior to the tax filing deadline".... or something like that... then if the IRS asks for the email you can provide it to them.

 

[jazz4cash]

In the end, the bank is going to have to issue a corrected 1099. File a complaint with the federal reserve and make sure the bank president is aware of it.

I’m wondering what the correction is when no 1099 should’ve been issued in the first place. I think that’s why they said I’d get a letter and I’m thinking it will not be timely.

 

[Ncc1701]

I’m wondering what the correction is when no 1099 should’ve been issued in the first place. I think that’s why they said I’d get a letter and I’m thinking it will not be timely.

A letter doesn't help. Remember the 1099R being issued means the IRS is seeing the amount on the 1099R as income under your SS#and they're expecting you to pay tax on it. You need to have the bank file a corrected 1099R showing $0 and that will ensure the IRS has the correct figure for your total income.

 

[Ready]

The company got back to me and reversed their position. They are saying I directed them to issue the $20K to my 401K so they are not going to change the 1099. It’s very frustrating because it was not my idea to put the money in my 401K. They eliminated my position, and during the exit interview the HR person offered to deposit $20K of severance into my 401K and asked me if I would like to do so. I responded yes, assuming that as the head of HR and the designated plan administrator for the 401K she would only offer this to me if she knew it could be done.

Four years later during an audit they discovered that I can only receive this money as a “bonus” if I’m employed on the last calendar day of the year. So they flagged it as an excess deposit and attempted to reclassify it four years later as taxable income.

There was a statement in the plan saying that if I retired during the year I receive the money I do not need to be employed on the last calendar day of the year. I did retire that year so I appealed it to the company. At first they agreed to reissue the 1099, but after dodging me for three weeks they reversed course and decided not to do so.

Now I have four years of penalties and still have to deal with actually removing the money from my account. I’m trying to find a CPA to help me sort this all out but trying to find a CPA or EA on April 13th who has time to talk to me has so far proven impossible. Very frustrating.

 

[jazz4cash]

Good luck. I would pursue the EA option. The company broke its own rule and refuses to make an exception or honor its written offer to fix the issue.

 

[jazz4cash]

A letter doesn't help. Remember the 1099R being issued means the IRS is seeing the amount on the 1099R as income under your SS#and they're expecting you to pay tax on it. You need to have the bank file a corrected 1099R showing $0 and that will ensure the IRS has the correct figure for your total income.

That’s what I’m thinking also but somehow I can’t imagine a 1099 with zeroes in box 1 and 2. When I called them it seems that they use a 3rd party that actually decides what action to take. The IRS has created a huge mess with so many unenforceable rules around transfers, rollovers, reportable transactions and so on. I have another one that the receiving institution wrongly recorded as reportable.

 

[gayl]

I used 4852 when an employer [in the process of going out of business] issued an incorrect W2. He had failed to forward my tax withholding & SSA so I did the form and submitted all my pay stubs. Worked great. Took around 6 months to resolve but the IRS decided in my favor and started looking for him for fraud.

FWIW I got my tax refund in a month instead of 2 weeks then they froze everything.

 

[Ready]

I used 4852 when an employer [in the process of going out of business] issued an incorrect W2. He had failed to forward my tax withholding & SSA so I did the form and submitted all my pay stubs. Worked great. Took around 6 months to resolve but the IRS decided in my favor and started looking for him for fraud.

FWIW I got my tax refund in a month instead of 2 weeks then they froze everything.

That's helpful to know, thanks. My hesitation with doing this is if I lose the dispute I'll owe even more money in penalties and late fees. I'm hoping to get to talk to an EA before making the decision which way to go.

 

[ocean view]

That's helpful to know, thanks. My hesitation with doing this is if I lose the dispute I'll owe even more money in penalties and late fees. I'm hoping to get to talk to an EA before making the decision which way to go.

Ask the EA if you can make a payment to the IRS to be held in your account for the tax year this originated? We did this in corporate taxes all the time in order the stop the interest from continuing to accrue. I don’t know if it works the same way for individuals such that $ can be held for past years rather than just applied to the current or future years. Certainly worth asking about though.

When the issue gets resolved the IRS will then recalculate the tax due, penalty (if any) and interest, with interest only calculated through your payment date. If the resolution is in your favor, the IRS may even pay you some meager interest on what you paid in.

 

[Ready]

I have called numerous EA’s, in some cases leaving them three messages, with no response. It doesn’t look like I’m going to find an EA until after tax season is over. So I went ahead and filed my tax returns and paid the taxes on the 1099. If anyone has any suggestions on how to find an EA I’m open to trying anything. I still need to deal with the penalties on the contribution as well as the fact that the money is still in the IRA, so I definitely need an EA to walk me through the process.