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IRS: right hand takes, left hand gives back

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hengwen

Junior Member
Oregon.
I didn't file my 2003 taxes until spring 2005. I made very little money that year but still owed and paid $696 in taxes. A CPA did my taxes for 2003 & 2004 very quickly so they'd be ready for my divorce trial. I didn't send the 2004 return in right away (had an extension) so I'd have time to go over it carefully. I discovered he had not included the home office deduction on either year, so I filed an ammended 2003 return and redid the 2004 return myself. I asked the IRS to apply the refund for 2003 to my 2004 tax liability and paid the remainder due for 2004. A month later I get a notice from IRS saying I owe $256 in penalties & interest for 2003. I didn't send it in because I planned to appeal it due to personal hardships relating to the divorce. About 6 weeks goes by and suddenly a refund check from the IRS shows up for almost $2700! I finally figured out that they must have applied my 2004 payment to my 2003 penalties & interest and refunded the rest. So here's my question: What are my chances of keeping my mouth shut and keeping this windfall without it coming back to bite me next year or in a few years?
 


Snipes5

Senior Member
If it isn't rightfully yours, zero.

Call the IRS and have someone look at your "account". Ask them what was received, and in what order everything was applied.

If you were expecting the Amended '03 to generate a refund, and also '04 to be a refund, there are no penalties for late filing if you have a refund coming.

It sounds like some of this crossed in the system. Just call them and find out. They won't do anything to you for calling.

Snipes
 

hengwen

Junior Member
More left hand doesn't know what right hand is doing

Oregon
Ok, I just got another notice from the IRS to complicate things more. Because I filed an ammended 2003 return that reduced my tax liability for that year, they have recalculated and reduced the interest and penalties (originally calculated to be about $256) and say they are issuing a 'refund' of $241. So now, even though they've already deducted the 2003 penalty & interest from my 2004 tax payment, they still want me to send them $72.
I have heard plenty of nightmare stories about how things can get so snarled up and misunderstood with the IRS. These numbers don't even add up correctly. I suppose at some point I'll get a letter about my 2004 taxes that will make it even more complicated. I read that it's a good idea to create a paper trail by depositing erroneous refunds and then issuing the IRS a new check out of my account, rather than just returning their check. What do you think?
 

Orebell

Member
Call them

The IRS can screw things up royally. It is best to call them and figure out where things are at. Even then expect the unexpected. Better to be safe than sorry.


hengwen said:
Oregon
Ok, I just got another notice from the IRS to complicate things more. Because I filed an ammended 2003 return that reduced my tax liability for that year, they have recalculated and reduced the interest and penalties (originally calculated to be about $256) and say they are issuing a 'refund' of $241. So now, even though they've already deducted the 2003 penalty & interest from my 2004 tax payment, they still want me to send them $72.
I have heard plenty of nightmare stories about how things can get so snarled up and misunderstood with the IRS. These numbers don't even add up correctly. I suppose at some point I'll get a letter about my 2004 taxes that will make it even more complicated. I read that it's a good idea to create a paper trail by depositing erroneous refunds and then issuing the IRS a new check out of my account, rather than just returning their check. What do you think?
 

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