I owe irs

[kttrumbo]

What is the name of your state (only U.S. law)? Ohio...I received a notice from the irs saying I owe $4545.00 from 2013. The reason is I received a 6000$ check from a class action settlement involving HSBC mortgage. The scumbags that HSBC are,ended up losing our home,because of several errors from HSBC about home loan modifications that we were signed up for. This all started in 2010. Turns out a class action lawsuit was filed against HSBC and thousands of people were involved. Well they got my house valued at $110,000 and all I got was 6000$ from the settlement. The irs is saying I have to pay tax on that amount and interest. I was told previously that HSBC was responsible for the taxes. What should I do? Plus I never got a 1099 showing any tax due.

 

[LdiJ]

What is the name of your state (only U.S. law)? Ohio...I received a notice from the irs saying I owe $4545.00 from 2013. The reason is I received a 6000$ check from a class action settlement involving HSBC mortgage. The scumbags that HSBC are,ended up losing our home,because of several errors from HSBC about home loan modifications that we were signed up for. This all started in 2010. Turns out a class action lawsuit was filed against HSBC and thousands of people were involved. Well they got my house valued at $110,000 and all I got was 6000$ from the settlement. The irs is saying I have to pay tax on that amount and interest. I was told previously that HSBC was responsible for the taxes. What should I do? Plus I never got a 1099 showing any tax due.

What you received was a CP-2000 letter which states "proposed changes". The IRS is giving you the opportunity to challenge those changes.

6000.00 of ordinary income would not result in 4545.00 in additional tax, even with interest and penalties, unless you originally received EIC and the IRS is attempting to treat the income as investment income, therefore making you ineligible for EIC. You need to get a tax professional involved in your case ASAP. You need someone who can review your original return and respond to the IRS.

I would argue that the 6000.00 was sales proceeds from the "sale" of your primary residence and therefore excludable from income.

Call around to local tax offices tomorrow until you find one where a live person answers. Any office that is truly staffed year round will have someone on board that can help you. Yes, you will have to pay them for their services, but what you will have to pay them will be a minute fraction of what the IRS wants from you.

 

[kttrumbo]

What you received was a CP-2000 letter which states "proposed changes". The IRS is giving you the opportunity to challenge those changes.

6000.00 of ordinary income would not result in 4545.00 in additional tax, even with interest and penalties, unless you originally received EIC and the IRS is attempting to treat the income as investment income, therefore making you ineligible for EIC. You need to get a tax professional involved in your case ASAP. You need someone who can review your original return and respond to the IRS.

I would argue that the 6000.00 was sales proceeds from the "sale" of your primary residence and therefore excludable from income.

Call around to local tax offices tomorrow until you find one where a live person answers. Any office that is truly staffed year round will have someone on board that can help you. Yes, you will have to pay them for their services, but what you will have to pay them will be a minute fraction of what the IRS wants from you.

Thank you!

 

[davew128]

I would argue that the 6000.00 was sales proceeds from the "sale" of your primary residence and therefore excludable from income.

You might want to confirm the nature of the lawsuit before taking that position. A lot of these suits are over the mortgage not the foreclosure. I personally know the guy who sued BOA over its incorrect calculation and tax reporting of interest on negative amortization loans.

 

[kttrumbo]

You might want to confirm the nature of the lawsuit before taking that position. A lot of these suits are over the mortgage not the foreclosure. I personally know the guy who sued BOA over its incorrect calculation and tax reporting of interest on negative amortization loans.

The nature of the lawsuit was because HSBC was improperly handling loan modifications and not following through with them,therefore making people lose their homes.

 

[LdiJ]

You might want to confirm the nature of the lawsuit before taking that position. A lot of these suits are over the mortgage not the foreclosure. I personally know the guy who sued BOA over its incorrect calculation and tax reporting of interest on negative amortization loans.

In that instance I would take the position that the money is a refund of post tax dollars.

 

[davew128]

In that instance I would take the position that the money is a refund of post tax dollars.

And I would be inclined to agree.

 

[kttrumbo]

so I need to write an explanation to the IRS by Oct18th. Can anyone give me an idea how to state this? When HSBC started the foreclosure they more or less forced us out and we moved in June 2010. The modification BS went on for probably a year until after we moved and found out about the class action lawsuit. I believe this was in 2012(the lawsuit) so Im sure it can be researched. HSBC sold our house very quickly and put locks on the door with some of our belongings still in the basement,that were then stolen and tried to be sold on Craigslist! Luckily I discovered it and called police and some of them were returned. We lost our home and only got 6000$ compensation so why would I owe tax on that money. Please help!! Thanks to you all.. Oh and like I said the lawsuit was because of not following thru with the modifications and predatory lending.

 

[ecmst12]

You were advised to get a professional involved to handle the specifics. I would suggest you listen to that advice.