Is it normal to be asked to do taxes if you had no income&got real estate liscence but did no transactions?

Question

They're saying (The IRS), that based on the average salary that professionals of that type (Real estate professionals) make per year that the assessment they are interested in receiving is around $3,000, but no transactions were done whatsoever, the real estate license was obtained but no business was done.

They sent a proposed assessment, which they said was not a bill and that I could give an explanation if I did not have a filing requirement etc....and once I filled it out completed with the explanation, attached to their forms on a separate sheet, they responded by sending a bill? How can I prove that I did no transactions, what documents do I need to show this?

Answer 1

No one is to say everything the IRS or others do is always correct; even our firm we do the same. Mistakes happen, computers kick out crap all the time. Too bad it is addressed to you.

We have seen many things such as a "shelf corporation" that we set up for example. Doesn't do any business but basically more or less sits on the shelf to collect dust and some states require returns while IRS does not.

A letter would be sufficient. You could file the return. Zeros all the way down for the business side of the return, 1040 Schedule C, 1065, 1120, 1120S, I take it in your case might be one that is an LLC related one. Anyway up to you a letter is fine. I made no income you ..... (smiles). Do they have proof that you did? That would be a snap huh? Ask them. They wont' bite. Suggest that you make such inquiry. Maybe someone claimed it under your name? Heck it happens. Or maybe there is other reasons. As the one poster states I have not ever seen a letter that based on what people make they make this much. Like cab drivers have you heard the one about the cab drivers or the barber who get cash all the time? Check it out you should request that printout of that account.

It is just an inquiry at this state. Up to you if it turns into a problem. Our suggestion, dont' sit on it. Due your due diligence and find out what it is that makes them think this way. It could be error but in 26 years in accounting have not seen one yet to that event. From IRS or State departments and we have and do returns for many many many people, barbers cab drivers you name it and of course Real Estate people.

Thank you. I remain

Sincerely,

Wayne Barney
President
BC Business Services, Inc.
Quality Financial Services Since 1994 with Clients in over 25% of the United States.
1877-343-5147 Toll Free
http://www.bcbsinc.com
email: [e-mail]
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Answer 2

A sworn statement under penalty of perjury that you had no income and were threfore not legally required to file a tax return should be sufficient.

Something funny is going on here. The IRS doesn't make assessments based upon what they think your income might be based upon your occupation without at least SOME evidence to back up their position such as evidence that you were paid monies that were not reflected on your tax return.