IRS assessment

Technical topics regarding tax preparation.
#1
philly  
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I filed a 1040 by April 15th for a client that is a widow with dependent children. The client does not have any taxable income or tax due on the 1040 that was filed. She has itemized deductions that reduced her taxable income resulting in a zero tax .

On September 16, 2019 the IRS assessed an additional tax of $ 2,545 without a letter of explanation or change.
I obtained a transcript of the tax return which shows no taxable income or tax due on the return that was filed timely however on September 16, 2019 the transcript shows the assessment of $ 2,545.

I have written a letter and followed up with a call to the IRS. The IRS stated that a letter of change was sent to the taxpayer explaining the reason for the assessment. The widow never received the letter. So I requested the IRS to sent another letter. That IRS stated that they can not send another letter and have no explanation of why there was assessment on the account.
It clearly looks like a system type error by the IRS.
I am waiting for a response to my letter that was sent several weeks ago.
Does anyone in the group have any suggestions ?
 

#2
Webster  
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Did you try matching the transcript codes to see if you can narrow down the reason for assessment?

https://www.irs.gov/pub/irs-utl/6209-section-8a-2012.pdf
 

#3
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Contact Tax Payer Advocate
 

#4
philly  
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I did have the codes from the transcript by the IRS does not know what it pertain to.
I will try tax payer advocte
 

#5
Noobie  
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Did they have health insurance?
 

#6
philly  
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That's a good question Noobie ! The transcript code is 290 which just says additional tax assessed. The original tax assessed was $ 2,485. I will double check with the cleint concerning the medical insurance.
 

#7
mscash  
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If there was a Code 922 that means there was a discrepancy between posted wage and income documents and what was on the return. This also means a CP-2000 was issued and probably ignored.
 

#8
LW25  
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Assuming that there was no math error or clerical error on the return (section 6213(b)), the IRS normally could not legally assess an amount beyond what was shown on the return (which I understand in this case was zero) without first issuing a Statutory Notice of Deficiency (90 day letter), and waiting the 90 days without the taxpayer having filed a Tax Court petition. Then, the IRS could legally make the assessment. See section 6213(a).

For what it's worth, I'm thinking that a matching problem (if that's what it was) would not normally qualify as a math or clerical error.
 

#9
philly  
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I have tried to explain to the IRS via phone call and letter that is an invalid assessment and most likely a computer system error on their part. The taxpayer has a very low taxable income and no tax due. The code on the transcript was 290 which is a debt tax assessment to the account ? I will try today calling IRS PPH today to resolve this.
Nothing but a big waste of time.
 

#10
Joan TB  
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A transcript of the tax return is only what was filed, and usually doesn't include any changes made by the IRS.

What I think you should pull is a Wage & Income transcript to make sure there wasn't any unreported income. For example, a 1099-C for cancellation of debt? Something like that could easily happen to someone with little income and they don't realize it is taxable.
 

#11
philly  
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I called the IRS this morning and spoke to an agent that was helpful. It appears that my letter questioning the assessment which was mailed to IRS several weeks ago was only entered and scanned on November 22th. An agent is assigned the case and looking into the matter .There is a 15 week IRS hold on issuing any more letters.

The agent I spoke to agreed that the assessment is most likely a system error since the amount of $ 2,485 additional tax had no explanation concerning the change and does not make sense since the taxpayer has very little income and no tax liability.

The big question of this day is who do I mail my bill to -LOL the taxpayer is a widow with very little income.

Happy Thanksgiving group and thanks for your input !
 

#12
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Some days, we just have no choice but to "invest" in the client and write this stuff off.

What goes around - comes around.
 

#13
philly  
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I did my Mitzvah ( good Deed ) for the day !
 

#14
Andrew  
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One of my clients got a letter for additional tax but someone had filed a fraudulent return under his name.
 

#15
Joanmcq  
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Did she have a health insurance through the marketplace that you didn’t claim? That would create the kind of letter you say is missing.
 

#16
philly  
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As I mentioned in the above post I contacted the IRS. The case has been assigned to an Agent to review. Based upon all of the information that I gave the IRS including reviewing a return transcript they have no idea what so ever what their additional assessment pertains to.
Like many in the group I have been in practice for many years and I have never seen the IRS so understaffed and generally very unorganized.
 

#17
LW25  
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philly wrote:As I mentioned in the above post I contacted the IRS. The case has been assigned to an Agent to review. Based upon all of the information that I gave the IRS including reviewing a return transcript they have no idea what so ever what their additional assessment pertains to.
Like many in the group I have been in practice for many years and I have never seen the IRS so understaffed and generally very unorganized.


If you think that's bad, consider this. There are parts of the IRS bureaucracy that aren't even aware that a partnership itself can now incur a Federal income tax liability, beginning in connection with returns for the 2018 tax year. In response to correspondence our clients have sent to the IRS regarding the new partnership-level tax for year 2018 and the Centralized Partnership Audit Regime, the Large Business & International Division of the IRS in Odgen has sent letters to not one but two of our clients incorrectly saying that "partnerships do not incur federal income tax liabilities".

Under Code section 6232(a) (with an exception not material to this context), the new partnership level tax is indeed "assessed and collected in the same manner as if it were a tax imposed for the adjustment year by subtitle A [of the Internal Revenue Code]". Subtitle A, of course, is entitled "INCOME TAXES".

Although the tax is imposed for the "adjustment year" (the year in which the tax adjustment is finalized, basically) and not for the tax year for the Form 1065 return itself (called the "reviewed year"), it's still a Federal income tax.

This change in the Internal Revenue Code was enacted over four years ago.

:roll:
 


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