irs overpaid me

[karlw]

What is the name of your state (only U.S. law)? California

The IRS overpaid me by 40k on my 2004 tax return and I never cashed the check. I was an independent contractor and listed 40k on the line for federal withholding when it should have been listed on estimated taxes already paid. They asked for copies of the federal withholding so we sent a letter telling them the mistake but they gave me credit for both fed withholding AND estimated taxes paid therefore I got a refund check of about 40k. Should I call them and tell them at this late date or has a statue of limitations already run for them to pursue me for penalties?

 

[davew128]

Unless this was done fraudulently, they had 6 years to claim a recovery of the overpayment from you from the time of payment.

 

[LdiJ]

What is the name of your state (only U.S. law)? California

The IRS overpaid me by 40k on my 2004 tax return and I never cashed the check. I was an independent contractor and listed 40k on the line for federal withholding when it should have been listed on estimated taxes already paid. They asked for copies of the federal withholding so we sent a letter telling them the mistake but they gave me credit for both fed withholding AND estimated taxes paid therefore I got a refund check of about 40k. Should I call them and tell them at this late date or has a statue of limitations already run for them to pursue me for penalties?

Since you never cashed the check, the money reverted back to the IRS. Therefore you are completely off the hook. They could not charge you any interest or penalty even if you were not already outside of the time limit for recovery.

 

[karlw]

Since you never cashed the check, the money reverted back to the IRS. Therefore you are completely off the hook. They could not charge you any interest or penalty even if you were not already outside of the time limit for recovery.

The IRS has re-issued the check several times now due to it being stale dated. Do I tell the IRS they made a mistake or cash the check at this time?

 

[LdiJ]

The IRS has re-issued the check several times now due to it being stale dated. Do I tell the IRS they made a mistake or cash the check at this time?

Send it back with a letter stating that you are not due the refund. Explain the error to them again.

 

[OHRoadwarrior]

Send it back with a letter stating that you are not due the refund. Explain the error to them again.

Best Answer. She is smart.

 

[LdiJ]

I should add...just so there is no mistake. It is against the law to cash an IRS refund check that you know that you are not entitled to receive. Generally when the amounts are small the IRS does not enforce that law, because most people are unware of it, but when the refunds are large, they enforce it big time.