scrabbler1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 20, 2009
- Messages
- 7,091
In the last 12 months, I have battled the New York State Tax Department (TD) twice, and won both times.
The first time began last November when my snake-bit friend (SBF), one I have written about many times over the years, received a letter from the TD about his 2021 return, one I prepared and indicated myself as a third-party designee, so I could speak for him officially. (I have been doing this for him since around 2002.)
The TD, for some strange and unspecified reason, did not believe he was entitled to use the beneficiary exclusion for the inherited IRA’s RMD. He had been withdrawing about $3k from the IRA since 2013, the year after his remaining parent (his mom) passed away. There is a limit on how much can be excluded, but it is way higher than $3k.
Because of this, the TD had billed him about $200 plus interest. We were stunned. The TD had never questioned this exclusion. In fact, because I hadn’t known about this exclusion until 2015, I had filed an amended return for 2013 to get nearly $200 back, and the TD granted it quickly.
So, what gives? I saw on Bogleheads that others had received a similar letter about their 2021 returns. After speaking with a phone rep, she told me she was getting lots of calls about this letter. The only common thread was that if someone didn’t make a withdrawal in 2020 (due to the Covid-Era CARES Act) but resumed in 2021, that triggered something in the TD’s system that might make the 2021 resumption of the RMD questionable. Makes no sense to me.
I responded to the letter by sending in various documents such as the Fidelity-generated 1099-R and account statement showing that the account is an inherited IRA, one which included in its title the “BDA designation, indicating it’s a Beneficiary Designation Account.
In late February, he got a response from the TD. They ignored everything I sent, demanding a copy of his mom’s death certificate and will. Did the TD, after allowing him to use the beneficiary exclusion for the preceding 7 years, as well as in 2022 and 2023 (2024 not filed yet), now no longer believe she is dead?
SBF is not very organized, so he had no idea where the documents were. And really, after 12 years, did he have any need to know where they were? Thankfully, his sister had them. (She had emptied her inherited IRA prior to 2021, so she received no letter from the TD.) She took a picture of them and emailed them to me. I printed them out, added some notes, and sent them to the TD.
In early April, he got another letter demanding payment and claiming non-response to the February letter, threatening further penalties and actions if he didn’t pay up. He didn’t get the letter until April 18th, but in the interim the balance due amount which appeared in his on line account disappeared, a good sign I hoped. When I called the TD the following Monday, the rep told me the case had been closed and he owed no money.
Quite a big waste of time and effort to achieve absolutely nothing! Me: One; TD Zero.
While this was going on, my dad got a letter in late January about his 2021 return. Like with SBF, I have been doing his returns and adding my name as a third-party designee, but only since 2020. My dad has not owed any state income taxes for many years because, after he stopped working, nearly all of his income is from his IRA and Social Security and gets excluded. The former is limited, and my dad’s withdrawals usually stayed under the cap. The latter is totally exempt from NY income taxes. The Standard Deduction eliminates what little is left.
However, I had made a mistake on his 2021 return. I didn’t include those income amounts as income even though they would get excluded a few lines down the return. It still correctly arrived at zero TI and zero taxes due. But the TD found the mismatch in reported income versus federal sources and assumed it was all taxable, claiming he owed about $200, plus interest. Couldn’t the TD have realized these income sources, other than SS (which they knew was excluded) were also excluded from taxes?
In February, I prepared an amended filing to fix the mistake I made, still arriving at zero TI and zero taxes due. I also officially responded to the letter including a page from the just-filed amended return explaining the key numbers new to the amended filing.
But in late April, during the same call I made about SBF’s return, the phone rep told me I needed to send documentation for the new amounts I included. These documents included all the 1099 forms (1099-R and 1099-SSA) even though no taxes were withheld from them. I had all of them available and faxed them to the TD with notes to connect them to the amended return.
A few days later, a letter appeared in my dad’s online account which agreed with the data I included in the amended filing. It said nothing about providing the documentation I had just sent. (It was dated before that phone call.) But still, I saw this is a great sign. Done deal?
No way.
In my dad’s online account, the balance due still appeared, and it was growing due to interest. In early September, I called the TD and soon spoke to a member of the Audit Group who handled my dad’s return. I was told it took until July to assign my dad’s amended filing and supporting documents to a reviewer. It took a week to finally speak to him and a week later, still in September, he told me the case would be closed with no taxes due.
But in early October, my dad got another letter from the TD. Like the one my SBF got in early April, it threatened further penalties and other actions if he didn’t pay up. I was furious! I spoke to a phone rep and the reviewer who told me the case would be closed. But, not wanting to ignore the letter completely, I responded to it recapping everything which had happened and chastising the TD for its sloppy record-keeping and for sending out that October letter.
But then, a few days ago, I checked my dad’s online account and the balance due finally disappeared! Maybe the irate letter I sent less than 2 weeks earlier finally got read by someone who made that balance due amount disappear.
Me: Two, TD zero.
The first time began last November when my snake-bit friend (SBF), one I have written about many times over the years, received a letter from the TD about his 2021 return, one I prepared and indicated myself as a third-party designee, so I could speak for him officially. (I have been doing this for him since around 2002.)
The TD, for some strange and unspecified reason, did not believe he was entitled to use the beneficiary exclusion for the inherited IRA’s RMD. He had been withdrawing about $3k from the IRA since 2013, the year after his remaining parent (his mom) passed away. There is a limit on how much can be excluded, but it is way higher than $3k.
Because of this, the TD had billed him about $200 plus interest. We were stunned. The TD had never questioned this exclusion. In fact, because I hadn’t known about this exclusion until 2015, I had filed an amended return for 2013 to get nearly $200 back, and the TD granted it quickly.
So, what gives? I saw on Bogleheads that others had received a similar letter about their 2021 returns. After speaking with a phone rep, she told me she was getting lots of calls about this letter. The only common thread was that if someone didn’t make a withdrawal in 2020 (due to the Covid-Era CARES Act) but resumed in 2021, that triggered something in the TD’s system that might make the 2021 resumption of the RMD questionable. Makes no sense to me.
I responded to the letter by sending in various documents such as the Fidelity-generated 1099-R and account statement showing that the account is an inherited IRA, one which included in its title the “BDA designation, indicating it’s a Beneficiary Designation Account.
In late February, he got a response from the TD. They ignored everything I sent, demanding a copy of his mom’s death certificate and will. Did the TD, after allowing him to use the beneficiary exclusion for the preceding 7 years, as well as in 2022 and 2023 (2024 not filed yet), now no longer believe she is dead?
SBF is not very organized, so he had no idea where the documents were. And really, after 12 years, did he have any need to know where they were? Thankfully, his sister had them. (She had emptied her inherited IRA prior to 2021, so she received no letter from the TD.) She took a picture of them and emailed them to me. I printed them out, added some notes, and sent them to the TD.
In early April, he got another letter demanding payment and claiming non-response to the February letter, threatening further penalties and actions if he didn’t pay up. He didn’t get the letter until April 18th, but in the interim the balance due amount which appeared in his on line account disappeared, a good sign I hoped. When I called the TD the following Monday, the rep told me the case had been closed and he owed no money.
Quite a big waste of time and effort to achieve absolutely nothing! Me: One; TD Zero.
While this was going on, my dad got a letter in late January about his 2021 return. Like with SBF, I have been doing his returns and adding my name as a third-party designee, but only since 2020. My dad has not owed any state income taxes for many years because, after he stopped working, nearly all of his income is from his IRA and Social Security and gets excluded. The former is limited, and my dad’s withdrawals usually stayed under the cap. The latter is totally exempt from NY income taxes. The Standard Deduction eliminates what little is left.
However, I had made a mistake on his 2021 return. I didn’t include those income amounts as income even though they would get excluded a few lines down the return. It still correctly arrived at zero TI and zero taxes due. But the TD found the mismatch in reported income versus federal sources and assumed it was all taxable, claiming he owed about $200, plus interest. Couldn’t the TD have realized these income sources, other than SS (which they knew was excluded) were also excluded from taxes?
In February, I prepared an amended filing to fix the mistake I made, still arriving at zero TI and zero taxes due. I also officially responded to the letter including a page from the just-filed amended return explaining the key numbers new to the amended filing.
But in late April, during the same call I made about SBF’s return, the phone rep told me I needed to send documentation for the new amounts I included. These documents included all the 1099 forms (1099-R and 1099-SSA) even though no taxes were withheld from them. I had all of them available and faxed them to the TD with notes to connect them to the amended return.
A few days later, a letter appeared in my dad’s online account which agreed with the data I included in the amended filing. It said nothing about providing the documentation I had just sent. (It was dated before that phone call.) But still, I saw this is a great sign. Done deal?
No way.
In my dad’s online account, the balance due still appeared, and it was growing due to interest. In early September, I called the TD and soon spoke to a member of the Audit Group who handled my dad’s return. I was told it took until July to assign my dad’s amended filing and supporting documents to a reviewer. It took a week to finally speak to him and a week later, still in September, he told me the case would be closed with no taxes due.
But in early October, my dad got another letter from the TD. Like the one my SBF got in early April, it threatened further penalties and other actions if he didn’t pay up. I was furious! I spoke to a phone rep and the reviewer who told me the case would be closed. But, not wanting to ignore the letter completely, I responded to it recapping everything which had happened and chastising the TD for its sloppy record-keeping and for sending out that October letter.
But then, a few days ago, I checked my dad’s online account and the balance due finally disappeared! Maybe the irate letter I sent less than 2 weeks earlier finally got read by someone who made that balance due amount disappear.
Me: Two, TD zero.
