Goofy IRS notices

[Famspear]

Just received a letter from the Internal Revenue Service on a client.

The letter is dated December 23, 2011, and states that the IRS has made a "thorough search" of its records but is "unable to locate" the Form 1120 tax return for the year ended December 31, 2011.

The letter goes on to say that if the IRS does not receive the information within 30 days -- that would be by January 22, 2012 -- the IRS may "determine" that the taxpayer is "refusing to comply with the law."

Duuuuhhhhhhhh.......



I get two or three of these kinds of letters a year.

My favorite (which I may have mentioned in a previous thread) was the letter I received some years ago wherein the IRS Atlanta Service Center claimed that the period from July 1, 2002 through June 30, 2003 (the fiscal year for the taxpayer corporation in that case) was a period of "greater than 12 months."

[webhick]

If you want to have some fun with the IRS, send them a post-it note along with a tax return that says something like, "I've sent you as much as I can now, I'll pay the rest off in a week or so."

Then they start sending you "we're researching your correspondence" letters for about six to eight months, meanwhile the tax return has been paid in full including interest and penalties.

I'd like to say that my client would never do that again, but it's been three years running.

[Unidyne]

A friend of mine used to deliberately overpay the IRS 1 cent on his taxes, just so he could get them to spend the time and effort to send him a refund check for the penny, which he wouldn't cash.

[Quixote]

A friend of mine used to deliberately overpay the IRS 1 cent on his taxes, just so he could get them to spend the time and effort to send him a refund check for the penny, which he wouldn't cash.

That's a nice story, but I doubt it ever happened. IRS does not send refunds of less than $1 unless the taxpayer specifically requests one. And he would probably have to request it several times before the government actually mailed him a check, because the first few IRS employees he spoke with wouldn't take him seriously or know how to proceed if they did.

[webhick]

Found this on the memebase today:

[Cathulhu]

Little known fact--everyone gets ONE and only one freebie on penalties. If you have a good record and only screw up the once, IRS will accept any dumb explanation and give you a penalty waiver. Once. But they can't waive the interest.

[Famspear]

I received another goofy notice today. This one is from the ACS unit (insert rolling eyes icon here... ) of the IRS in Cincinnati.

I get this kind about once a year. It's a three page notice that demands payment, but does not say what kind of tax, what tax period, or even the amount. There is a coupon on the third page of the notice, with a blank to fill in an amount, though.

If I try to call the toll free number on the notice, of course, the IRS person will refuse to talk with me without a power of attorney. But I can't get a power of attorney unless I know what tax form and period to put on the power of attorney.

I was able to figure out what the notice was about because of some coding in the notice, but a normal person (i.e., a non-tax practitioner) would not be able to do that.

[Famspear]

I was going through the files on a particular client of mine and came across another IRS idiocy from a few months ago.

This one is a notice from the IRS dated November 10, 2014, demanding to know why our client, a partnership, had not filed its Form 1065 partnership return for the year ended December 31, 2014. The notice stated that if the client did not file the return within 30 days, the IRS might have to prepare a 6020(b) return.

Of course, as of November 10, 2014, the 2014 tax year wasn't even over yet. And, if the partnership had "complied" with this idiotic notice within the 30 days of November 10, 2014, the tax year would still not have been over.

As any tax practitioner knows, the 2014 Form 1065 return is not even due until April 15, 2015.

We get one or two of these every year.

[Arthur Rubin]

Not exactly a "notice", but I'm still getting 1041-ES forms for a grantor trust which terminated in 2006. (Possibly, I should have filed a 1041 for 2006, for the month between the death of the grantor and the dispersal of assets, but the trust had less than $100 income, all interest, during that month.)

At least California isn't still going after the trust for back child support or medical insurance. (The trust had a household employee, who was paying back child support, so "I" (acting as accountant for the trust) had to pay 50% of net wages to the California county in question, and they asked, every year or so, if the trust supplied medical insurance to children of employees.)

Details of the child support demands are no longer suitable for this board.

[Famspear]

Here's an old thread on this subject of weird IRS notices:


viewtopic.php?f=12&t=3095

[Famspear]

It's been a while. I finally got one of these for tax year 2015.

Just received an IRS notice dated March 3, 2016, complaining that the IRS cannot locate a Form 1041 return for a particular entity for the tax period ended "December 31, 2015." The notice complains that the IRS may conclude that my client is not complying with the tax laws, and that the IRS may have to prepare a 6020(b) return if my client does not comply, etc., etc., blah, blah.

Of course, my client has filed all tax returns. And the Form 1041 for the year ended December 31, 2015 isn't even due until Monday, April 18, 2016.



As noted earlier, when I get these letters, sometimes the IRS hasn't even bothered to wait for the tax period to end -- before complaining that the tax return for that year hasn't been filed.

[Arthur Rubin]

I'm still getting packet 1041-ES for a (grantor) trust which dissolved in 2006. I actually talked to someone at the IRS in 2008, and the person said there's no point in trying to stop the mailings.

[Famspear]

I'm still getting packet 1041-ES for a (grantor) trust which dissolved in 2006. I actually talked to someone at the IRS in 2008, and the person said there's no point in trying to stop the mailings.

Yeah, they're just blank forms, and the IRS isn't actually asking for anything to be filed with the IRS. The system is so antiquated that trying to stop the mailings of the forms might be more trouble than the effort would be worth.

[Pantherphil]

My two favorite IRS correspondence debacles.

I am the named trustee of an irrevocable trust. I filed a Form 1041 signing my name as trustee. The IRS sent a letter proposing an adjustment, addressed to me as trustee. I wrote back objecting to the adjustment and correcting the IRS error signing my name as trustee. The IRS wrote back that I was not authorized to communicate about trust matters and that the trustee (me) would have to designate an agent (me) as an authorized representative of the trust on Form 2848 in order to communicate with me about the return. Apparently, in the IRS view, I am not authorized to speak for myself.

I once filed a 1023 for an exempt organization, enclosing Form 2848 and listing myself as the designated contact. The IRS acknowledged receipt in a letter and indicated that if no communication was received in 45 days I should call the IRS at a designated number to determine the status of my application. When I called the IRS lady advised that she could not advise me on the status of my application because I was "not on the list." I pointed out that I had filed the Form 1023, enclosed a 2848, listed myself as a contact person, and had received correspondence from the IRS instructing me to call the IRS number. She insisted I was not on the list. I told her to look at the Form 1023 that listed me as the contact person and the Form 2848. Her response: "Sir, your file is in Kentucky. I am in Utah. Have a nice day." Had to sic my Congress critter on 'em to move it along.

[Famspear]

.....I am the named trustee of an irrevocable trust. I filed a Form 1041 signing my name as trustee. The IRS sent a letter proposing an adjustment, addressed to me as trustee. I wrote back objecting to the adjustment and correcting the IRS error signing my name as trustee. The IRS wrote back that I was not authorized to communicate about trust matters and that the trustee (me) would have to designate an agent (me) as an authorized representative of the trust on Form 2848 in order to communicate with me about the return. Apparently, in the IRS view, I am not authorized to speak for myself.

In part, the problem is inadequate training of IRS personnel and, in part, the problem is the complexity of the law. Of course, under the Internal Revenue Code, a trustee of a trust does not need a Form 2848 (power of attorney) to legally inspect "return information" (which is a technical legal term) or to legally obtain disclosure of return information from IRS personnel. See generally 26 USC section 6103(e)(1)(F)(i), section 6103(e)(7), and section 6103(b)(2). A Form 2848 is filed to allow a "representative" to inspect and obtain disclosure. The trustee, however, is not merely the "representative" of the taxpayer; for some purposes, the trustee is the taxpayer. See generally 26 USC section 6012(a)(4), section 6012(b)(4), and section 6151(a). (Depending on the context, either the trust or the trustee can be considered the "taxpayer" under the Internal Revenue Code.)

I once filed a 1023 for an exempt organization, enclosing Form 2848 and listing myself as the designated contact. The IRS acknowledged receipt in a letter and indicated that if no communication was received in 45 days I should call the IRS at a designated number to determine the status of my application. When I called the IRS lady advised that she could not advise me on the status of my application because I was "not on the list." I pointed out that I had filed the Form 1023, enclosed a 2848, listed myself as a contact person, and had received correspondence from the IRS instructing me to call the IRS number. She insisted I was not on the list. I told her to look at the Form 1023 that listed me as the contact person and the Form 2848. Her response: "Sir, your file is in Kentucky. I am in Utah. Have a nice day." Had to sic my Congress critter on 'em to move it along.

I run into this problem sometimes. Fortunately, most IRS personnel with whom I deal are helpful.

EDIT: When I say "this problem," I mean the problem where the IRS gives someone written instructions, and then the IRS doesn't even comply with its own written instructions.