For year 2003, IRS sent a notice saying that I owe a ridiculous sum of money, Need advice?

Question

For year 2003, IRS sent a notice saying that I owe a ridiculous sum of money.

This is primarily due to schedule-D. I had filed one for 2003 but totalled all the transactions rather than writing every item line by line. Unfortunately I had moved in mid-2005. So IRS mailed out some kind of errata which I needed to have responded by August 2005. Since I moved, I never received this notice. IRS then sent a collections notice in 2006. For which I responded with a new schedule-D with all the details. But IRS keeps ignoring every time I send a correspondence. I have hired a CPA. But today I received another notice, then I called IRS, they simply said, "Sir, your time to file for a correction to schedule-D expired in August 2005. So you owe us more than $100K. We will collect from you".

I obviously am going to call my CPA and ask him to follow up. But I wanted some help from someone who has gone through this. This is just to make sure that my CPA is doing the right thing.

Thanks

Thank you so much for all those who a re posting here. Especially the one who told me about 04-15-2007 being the last date to file the amended return for 2003.

Good News!!! You wouldn't believe, when I called the IRS, as I said, the guy told me, "Sir, we have made up our mind. You owe us the $100K and we will collect it from you by wage garnishment or assets from bank". But when my CPA called the IRS they told him, "The letter was sent by mistake".

I totally don't get this. Why does the IRS give me (the tax payer) one answer and the CPA another answer. I'll be glad if they just resolve this thing.

Answer 1

I suggest you tell the CPA you will try to solve this first. Go tl nearest IRS office, ask to see Revenue Officer, they do collection work. Explain what happened and ask how to correct. I believe you need to file and amended return , i.e., a Form 1040X, but for 2003 you only have til 4-15-2007 to do so. If you believe IRS person is unhelpful, rude, etc. demand to see their supervisor. They must tell you how you can correct this. Keep careful notes on who you talk to name, title, ph #, gist of what they said. The Tax Advocate is one to see only if regular IRS channels are not helping you. Or pay the CPA to help you.

Answer 2

Did you have taxes due on your last return? Have you actually seen this letter from the IRS? It doesn't make much sense that the IRS would send such a letter. The withholding is just an estimate of what your actual taxes will be. You should claim more or less exemptions to come out about even. Going to single and 0 from married and 3, would be a huge difference in the amount withheld from each paycheck. Even if you get it all back at the end of the year, why should you give the government a interest free loan. I suggest you call the IRS and check into this further before actually changing your withholding.

Answer 3

You are in deep trouble. There are strict procedural requirements associated with changes which you should have made to your return [i.e. amended return]. It is clear the IRS has filed a lien against you and will proceed with a levy in the near future. I trust your CPA will attempt to negotiate with the IRS a settlement by making an offer of settlement. You can verify IRS collection procedures by viewing the IRS collections manual on their web site or a number of other site such as http://www.taxsos.com/IRS%20-%20Internal%20Revenue%20Manual.htm. Sorry but good luck!

Answer 4

If the service persists either have the CPA contact the taxpayer advocate or do it yourself. This department was specifically put in place to take care of the kind of abuse that the agent is trying to put on you.

Answer 5

Go find a tax ATTORNEY, your CPA cannot help you now.

IRS has big guns, you need big guns to fight them.

Good luck.

Answer 6

You may also need a tax attorney.

Answer 7

I wouldn't worry too much. They are trying to scare you. Get a tax lawyer involved.