NEW FRIVOLOUS PENALTY QUESTION

[gottago]

(I realize that I should probably post this on the "Tax Policy and Practice" section but am hoping it might get more readings here)

Today, we received 2 letters from the IRS penalizing us an additional $5000 each for frivolous returns related to tax year 2004 that were allegedly submitted by us in August 2007. Trouble is, we did not submit ANYTHING to them in August of 2007. We have not filed anything that could possibly be considered frivolous since mid-2006.

We did submit (in June 2007 during the OIC process) accurate returns for 2004 which were processed with the tax/penalties/interest assessed several months later. We do have an outstanding balance for that year.

I just don't understand this and the letters say that our only recourse is to pay the $10,000 and then take it up with the tax court. Sadly, I don't have 10K just laying around

Thanks in advance for any words of wisdom.

[Colonel_Buck]

Can you ask the IRS for the original signed tax return that you allegedly filed in August 2007?

[Nikki]

(I realize that I should probably post this on the "Tax Policy and Practice" section but am hoping it might get more readings here)

Today, we received 2 letters from the IRS penalizing us an additional $5000 each for frivolous returns related to tax year 2004 that were allegedly submitted by us in August 2007. Trouble is, we did not submit ANYTHING to them in August of 2007. We have not filed anything that could possibly be considered frivolous since mid-2006.

We did submit (in June 2007 during the OIC process) accurate returns for 2004 which were processed with the tax/penalties/interest assessed several months later. We do have an outstanding balance for that year.

I just don't understand this and the letters say that our only recourse is to pay the $10,000 and then take it up with the tax court. Sadly, I don't have 10K just laying around

Thanks in advance for any words of wisdom.

Try the Taxpayer's Advocate's office. They might not be able to actually DO anything, but they can collect all the relevant information and get it to you. In fact, if they see an error on IRS' part, they really can get it corrected.

[Burzmali]

DFTT guys, gottago is looking for a serious answer.

[ASITStands]

I agree with 'Nikki' .... try the Taxpayer Advocate.

It's the quickest way to see where you stand and what the problem's all about. They can put you in touch with the right person, and if there's an error, help remove it.

They can even 'stay' a levy if necessary to get it straightened out.

EDIT: And, that's a serious answer. I've seen many others get relief with the Advocate.

[Imalawman]

(I realize that I should probably post this on the "Tax Policy and Practice" section but am hoping it might get more readings here)

Today, we received 2 letters from the IRS penalizing us an additional $5000 each for frivolous returns related to tax year 2004 that were allegedly submitted by us in August 2007. Trouble is, we did not submit ANYTHING to them in August of 2007. We have not filed anything that could possibly be considered frivolous since mid-2006.

We did submit (in June 2007 during the OIC process) accurate returns for 2004 which were processed with the tax/penalties/interest assessed several months later. We do have an outstanding balance for that year.

I just don't understand this and the letters say that our only recourse is to pay the $10,000 and then take it up with the tax court. Sadly, I don't have 10K just laying around

Thanks in advance for any words of wisdom.

I don't mean to put down your legal help, but I've never gotten the impression that you had a good tax lawyer. A really good tax lawyer could get you through all of the crap that you've been going through with a lot less pain and agony that you've had. I would suggest looking into getting a top tax lawyer. Usually they will give you a free session and you'll at least know where you stand. Yes, go with the advocate, but also look into some really competent help.

[jkeeb]

Taxpayer advocate. If your only issue is the friv penalties for the one year, most likely the returns that they were assessed on have been floating around until they finally reached the frivolous filing section. If as you say, you have filed correctly since then, the advocates office may be able to reverse the penalties.

[SteveSy]

I just don't understand this and the letters say that our only recourse is to pay the $10,000 and then take it up with the tax court. Sadly, I don't have 10K just laying around

Thanks in advance for any words of wisdom.

I've been reading your ordeal since you first posted here. Sad that you're trying to work your way back in to the "system" and you keep getting smacked for doing it. Its really no wonder people often just roll the dice and do their best to avoid the taxman instead of trying to work their way back in.

It seems you've made an honest attempt to be compliant with the IRS, they in turn should try and work with you a lot more. Setting an example works both ways. A lot more people would try and rectify their issue once they went down the noncompliance path if the IRS recognized that being helpful to those who have seen the error in their ways is beneficial. It is beneficial to the IRS not only to collect what the IRS says you owe but the IRS benefits from others who may see your plight and see that the IRS is willing to work with them.

The IRS does not have the resources to track everyone down. It seems to me a lot of people know this even though they know its possible one day they will roll snake eyes and have the IRS on their butt. If the IRS tried to make compliance, once you have been non-compliant for a long period, easier more people would decide its better to avoid the bad roll altogether.

Many from what I see go down the dark path and realize that maintaining that path indefinitely is very inconvenient. However, they also realize that going back and facing what you're facing is even more inconvenient. Their option is get caught and lose everything or voluntarily submit on your own and lose everything and then some because now you've voluntarily given the IRS all the ammo they need to stomp you in to the ground.

Just my two cents...

[Joey Smith]

FWIW, sometimes you can find a CPA or Enrolled Agent who was formerly employed by the IRS, was well liked within the IRS, and these people can sometimes work *miracles* in curing back years and getting rid of fines, etc., by working internally through the system. But it is hard to find these people, they are not free (though not necessarily expensive), and you'll have to be willing to pay some reasonable amount based on your assets and earnings to get it all to go away.

[jkeeb]

What he said.

In exam, my dealings with TA were old cases that TA agreed to reopen. In one case, one of my no replies that resulted in a $250,000 assessment was reopened by TA. They gave the case back to me. Since the guy was much less afraid to meet with me, I was able to do a decent exam, and gave the guy benefit of many doubts, and he owed less than $2,000 as a result. Fortunately, he did have a lot of records. But originally he was afraid to meet and all I could do was disallow the items I was required to examine.

Much of the time, TA's will expedite refunds, do account research, or otherwise cause the area responsible for an action to get on the ball and do whatever is required. TA's cannot make an area do something they won't do, but they can advocate for the taxpayer and do so.

Regarding someone's friv pen, I don't know what it takes for it to be removed, but in the original case in this thread, TA can research the actions and make sure that if the taxpayer timely said "I didn't mean it", probably get the friv pen removed. IRS would much rather have a compliant taxpayer--that's the goal.

[gottago]

Thanks to those of you who responded (I confess that I did scroll through some of the other stuff in this thread).

I am getting together copies of the non-frivolous return that was filed, the letter assessing the tax in response to that filing and the current letters. I will send all this with a letter to the Tax Advocate office and follow up with a phone call.

I WISH I had the funds available to hire someone to help me. Am still paying off the $4K we put on Visa almost 3 years ago thinking we were hiring a reputable attorney to assist us with the OIC. He had a long career with the IRS in the office of chief counsel and told us he had lots of "connections" within the IRS. I assume posting his name here would be inappropriate but he has been mentioned by Demo once that I recall.

On the good side, 2007 and 2008 are filed, paid and frivolity free That is at least a start.

[ASITStands]

Would someone please get Weston White and his tax fantasies off this thread so those of us who'd like to answer the lady's question can concentrate on the right answers?

Why does every thread have to be hijacked by Weston White or SteveSy?

Thanks to those of you who responded (I confess that I did scroll through some of the other stuff in this thread).

I am getting together copies of the non-frivolous return that was filed, the letter assessing the tax in response to that filing and the current letters. I will send all this with a letter to the Tax Advocate office and follow up with a phone call.

I WISH I had the funds available to hire someone to help me. Am still paying off the $4K we put on Visa almost 3 years ago thinking we were hiring a reputable attorney to assist us with the OIC. He had a long career with the IRS in the office of chief counsel and told us he had lots of "connections" within the IRS. I assume posting his name here would be inappropriate but he has been mentioned by Demo once that I recall.

On the good side, 2007 and 2008 are filed, paid and frivolity free That is at least a start.

You're on the right track! However, I'd suggest you call the Advocate first. They'll open a case for you (assign a number, etc.), and you can fax the return, etc. directly to them.

That will get quicker results than sending it by mail then calling.

You'll find the Advocate very friendly and willing to help in whatever way 'she' can. As was mentioned by another, the Advocate works as a facilitator. They can 'stay' a levy. They can make sure the right person within the IRS gets the job done. They can get information.

While you're online with them, ask for current transcripts. It might help.

[Randall]

I concur with the advice to contact the TA. I have been arguing with the service for 18 months trying to convince them they were wrong and my client did not owe $88K for their 2005 return. This week, just six weeks after contacting the TA, the service agreed with me and is sending the client a refund. That, my friends, is a victory!

[ASITStands]

I concur with the advice to contact the TA. I have been arguing with the service for 18 months trying to convince them they were wrong and my client did not owe $88K for their 2005 return. This week, just six weeks after contacting the TA, the service agreed with me and is sending the client a refund. That, my friends, is a victory!

Exactly! I've seen penalties dropped. I've seen levies stopped. I've seen liens postponed until the taxpayer submited new information or an amended return to redetermine the amounts.

Audit Reconsideration is a wonderful thing, and the Advocate can facilitate that.

[webhick]

Would someone please get Weston White and his tax fantasies off this thread so those of us who'd like to answer the lady's question can concentrate on the right answers?

Done. This episode of The Weston White Show has been moved to here.

[ASITStands]

Thanks, Sweetheart! Hope all is well with you.

And, wishing 'gottago' well, as she contacts the Advocate.

[Judge Roy Bean]

I concur with the advice to contact the TA....

Exactly! I've seen penalties dropped. I've seen levies stopped. I've seen liens postponed until the taxpayer submited new information or an amended return to redetermine the amounts.

Audit Reconsideration is a wonderful thing, and the Advocate can facilitate that.

I've seen old liens released, document requests fulfilled and seemingly inexplicable demands explained through TA involvement, which came as a result of a suggestion here.

[wserra]

The directors of the firm hired to continue keeping the thread on-topic after the other posts had been moved, wish it to be known that more posts have just been moved.

It's like herding ants.

[gottago]

Update

Received two more CP15 letters today (one for each of us) with another $5000 penalty for me and a $10000 penalty for husband, again for frivolous submissions for tax year 2004. These are not duplicates of the previous ones. Total of $25,000 in penalties in a single week. Have no idea what is going on...will attempt to contact the taxpayer advocate Monday.

[Doktor Avalanche]

Update

Received two more CP15 letters today (one for each of us) with another $5000 penalty for me and a $10000 penalty for husband, again for frivolous submissions for tax year 2004. These are not duplicates of the previous ones. Total of $25,000 in penalties in a single week. Have no idea what is going on...will attempt to contact the taxpayer advocate Monday.

Just..wow!

Yeah, you should talk to that advocate ASAP. Wake his ass up, recall him from his family barbecue if you have to.