How much trouble am I in with the IRS?

In My Humble Opinion
1

I just got a letter from the IRS that my 2016 refund is being held up because they do not have my 2013 return. That year I filed by mail (no I do not have a record of that) because I owed them $480 and I filed a 9465 for an installment agreement along with the blank check. I checked my statements from 2014 and they never took money out. Yes I know I should have noticed but that was such a hard time financially I only knew I was hemmoraging money. No reason to track automatic withdrawls when you are flat broke just trying to make it through week to week.

I printed up my 2013 return (thank you Turbo Tax) but before I send it off, how much trouble can I be in? It looks bad “not filing” the one year I owe them money so I need to make sure I handle this properly from the get-go.

And yes I know YANML

2

WAG, if you’re due a refund this year, they’ll probably deduct what you owe them, plus interest, out of the refund. If that’s what happens, you’re [probably] golden. But I’d call and confirm that you’re settled up with them.
If you aren’t owed a refund, I’d start by calling them and see what’s going on. If you have the money now, set up a payment plan to get the back taxes knocked down (and/or stay on top of the current ones as well).

Also, if they yank the money out of your bank account on their own (as in garnish it, not take it according the payment plan your tried to set up years ago), take a look at how much they take. From what I understand, they’ll just take ALL the money in your account and wait for you to contact them to adjust it.

3

Contact some local professional person who does taxes. Not H&R block, etc. Talk to a real CPA who advertises “enrolled agent” status.

The money they cost is small and the amount of ass chewing and cost you’ll probably avoid is large.

My wife’s an attorney, although not a tax attorney. One of her sayings is “You can parlay a traffic ticket into murder one if you screw up responding to the summons bad enough.” Don’t be that guy. Clueless can be costly.

4

You aren’t “in trouble” the way a child is with a parent or teacher. They just claim that you owe them a modest amount of money and they want to collect it probably with some amount of not very excessive interest (you may be able to talk them down from that as well).

You can just call the IRS itself and ask them what you need to do and they should be able to help you. Not filing returns for a given year generally isn’t that much of a problem as long as you correct it and only owe a rather small amount of money. It usually isn’t a problem at all if they owe you money. I filed returns years late in my younger years and nothing happened.

I am constantly “in trouble” with the IRS and multiple state revenue agencies for reasons that I won’t go into but it isn’t something I have any control over. I just bundle up the nasty demand notices, mail them off to my family CPA and they get paid somehow. Nothing ever happens to me personally and some of them are for a lot more than a few hundred dollars.

I would just call the IRS, ask them about the best way to file a late return, the amount due and just pay it if it sounds right. Nothing will happen beyond that.

5

You want to contact them and tell them. In addition to interest there may be a penalty for not filing. If you tell them you did mail a return and show them that you have a Turbo Tax form (so you at least had the program back then, you might well be able to get them to waive the penalty. But your chances are much better if you contact them soon and ask them to do so.

6

I just realized I glossed past the part about you not filing in 2013. Or rather, mailing them in but them claiming they didn’t receive them. I’ve never mailed in my taxes and our CPA handles everything at work so I have to ask, or rather, I assume, there’s no confirmation when you mail in your taxes, is that correct?

I’d still go ahead and call them and see what they have to say and go from there. You can probably tell them that you DID mail in your tax return and go from there. You may want to save a PDF to your computer and offer to e-mail it over the the agent on the phone right away so, at the very least, you know they have it now.
Do you have the money to pay what you owed at the time? (did you then*)? If you do, and you can make the payment right now, it may be worth it to ask them to waive the interest and late penalty if you make the payment right away. [If you can do it] they’ll probably be just as happy to be done with it, as you’ll be to not have to pay all the extra money. If you can’t, I’d ask them to wave at least the penalty and possibly start the interest as of now and get an installment plan set up. Then go look up some resources online and fine the paperwork to send in to see about getting the penalties waived, if you incur any. There are some ways around them for people that don’t do this often.

One last thing, what’s the status of your state return for that year? If everything is okay with that, that is, it’s filed, the payments were made or the refund was issued, you may want to have that ready to go before you call as well. It may also help to show the IRS agent that you did make file that year.

*Another thought, did you have enough money in your account back then? If not, that could have been the problem. If they were trying to pull the money and couldn’t, it might just be catching up with you now.

ETA, and as long as you’re not looking to get out of them, I wouldn’t sweat it too much yet. It’s entirely possible that you’ll call and it’ll be one of those ‘hey, no big deal, this happens all the time, just send them over and we’ll get it cleared up’ things. No matter how it turns out, the tax man isn’t going to be banging down your door any time soon.

7

When I received a “You might owe us money” letter from the IRS, I calculated what I should have paid, added interest and assessed myself a 10% penalty. I sent them a letter explaining my arithmetic and a check. They promptly sent back a “Good enough” letter.

8

:eek:

That is astonishing. My experience with the IRS included a seven month long “audit-by mail” where we traded over 50 pieces of correspondence back and forth, only to result in a letter that stated we owed them 27 cents ( and that we didn’t have to pay if the amount was less than one dollar).

9

CPA and EA are different things. Either one can help the OP equally.

H&R Block et al do have EAs on staff in some cases, but don’t assume without asking.

10

Basically, as long as you aren’t ignoring them, you won’t get into too much trouble. Respond to them in a timely manner. They will send you a counter amount owed, usually just interest and penalties. If you agree, just pay it and you’re done. If you don’t agree, you’ll need to find a tax attorney to help you negotiate.

  1. Make sure you send call correspondence in a trackable format - like USPS signature required.
  2. Use an e-payment format to make the payments. I used my bank’s electronic payments this last year, but there is also an electronic payment service for the IRS online that you can use.

You will get tracking numbers using these methods and be able to verify that you have filed/written/paid what you said you did. Document everything from now on.

11

I tried to use some self-deprecating humor in my correspondence with them since I’m sure that they primarily deal with grouchy people that believe in their own innocence. I knew that I was in the wrong (I was missing receipts) so there was no sense in trying to start an argument or a negotiation.

Or I got lucky.

12

They recently decided I owed them, according to different letters, somewhere between $4800 and $11,000 for 2013. The final number was, of course, the highest one.

I called them, I went, “Help?!” and they talked me through exactly what the problems were and how to fix them.

I had to call back a couple of times, once for clarification and once to try to make sure they got all my stuff, because they don’t send confirmation and we were running up against the lien deadline. They were very nice, and even extended my deadline by several weeks to make sure I didn’t get a nastygram sent to work to take money out of my paycheck.

At the end of it all, they sent me a check for $486 in overpayment for 2013.

Call them. The boogeyman tales of the IRS are either mythical or outdated - as long as you communicate with them.

13

I called the IRS and they told me to file the return just like a normal one (i.e. send it to a service center not an office). Apparently there are limits on the fees but it will probably double the amount I owe and then I can protest it in 6-8 weeks after they process it.

14

Got my refund back and they took about $800 out. Now just waiting for a letter saying it is paid in full or something.

15

As long as you’re acting in good faith, the IRS is seriously about the most reasonable and fair-minded government agency you’ll ever encounter.

16

That’s been my experience over a couple of events with them. Perfectly reasonable people if you’re a reasonable person back.

OTOH, they are kinda slow moving and their various tentacles don’t seem to be connected to a single common consciousness. Which can lead to stuff misconnecting within their bureaucracy to “entertaining” effect: http://boards.straightdope.com/sdmb/showthread.php?p=11292587&#post11292587

17

I have gone through more audits than any middle class person I know of, at least a dozen. I have always found them to be reasonable and not hard to work with. I have never felt they were trying to get me in trouble. I have also never came out of an audit owing any money.

18

I filed about a month late one yea due to injuries and a lot of pain meds. When I contacted the IRS they reviewed by clean prior record and despite owing them money, they waived all penalties.

19

Heh!
Yeah, usually they’re quite reasonable, especially if you’re not giving them any shit.

OTOH, some intrepid soul kicked off a detailed ten year retrospective audit on me, and the accountant I hired wound up finding a LOT of money I’d left on the table. The audit reopened the books, and he got me a whopper of a refund - or, more to the point, a series of refunds. THAT particular case got shuffled through EVERY Service Center (literally) before they finally 'fessed up and paid me. Someone was looking to make a fat recovery, and instead wound up uncovering a liablity - which coudn’t have looked good on their numbers.

Interestingly, the Agency was unfailingly polite the whole time they were doing the duck-n-weave.

When you find yourself in a quandry, the IRS has Ombudsmen - use them. They’re paid to be helpful, and they ARE.