Kea

Thanks!

Correct on all counts. And so we wait.

I e-filed a 2011 return today through TRX and it was accepted.

When I prepared a return for a new client, I transposed two digits on the spouse's SSN. And, of course, she did not catch it in her review. IRS rejected it, I fixed it & resent. Client said they did not need revised copy of return. When sending the Q3 1040 ES, she caught that the form had her SSN wrong. Does this cause any problems? I "assume" it gets posted by the primary SSN. If it is a problem, how do we resolve it? Thanks!

Client received LTR 4314C stating that they will respond in 60 days to the "correspondence received July 30, 2013." This would be the 1040X sent with the CP2000 notice. It does not mention the CP2000 or the Letter of Deficiency. Our response and the letter of deficiency crossed paths in the mail. Their letter says that no action needs to be taken at this time. Is that true? Do I need to call to make sure they know the CP2000 response and the letter of deficiency are related? I'm still concerned about the October 29 tax court deadline. (FWIW, I really DON'T want to go to tax court!)

I can relate to most of them and I'm not yet 60!

I, too, have had success with the checkbox. I didn't even try it this time since it was over a year. But there was a 3rd party designation on the CP 2000. They seemed happy with it.

Thanks. I think I need all the luck I can get!

Yes, I agree & yes, I am paranoid. I've never had to deal with this kind of situation before. I really do appreciate all the advice. However, the CP2000 response was only mailed a week and a half ago. So, I'm not surprised that it is not in their system yet. I offered to fax the reply to her. She said it would have to go to the Austin office. She suggested that faxing and mailing could cause confusion. But, I'm still willing to fax it if it will help. I will stay on top of this and WILL NOT let this drag on until the October Tax Court deadline.

Thank you for all the great advice. I'm hoping that the IRS will find that what I sent with the CP2000 response on 7/26/13 is clear and succinct. For some things I do prefer a phone conversation so that I can clarify as necessary. I spoke to a very nice person on the phone, and gave her the timeline of events. She said they did not yet have the response that was mailed 7/27/13, but was not surprised. She documented our conversation and said we should wait about a month. If my client has not yet received a follow-up lettter from IRS, then I should contact them again.

Agreed. I've seen it before, too - especially in entertainment and sports. (Mainly because they are already famous.)

(Rounding off a lot....) Let's say I'm the daughter and now "only" receive approx 10% of Dad's estate instead of the 20%. I think I'm still OK receiving $7 million instead of $14 million. I'm sure she's used to a very different lifestyle than I am. But for me $7 vs $14 million would not be much different. There's no way *I* could spend even the $7 million in my lifetime. I just have no interest in owning HUGE houses or airplanes or any of that kind of thing. Sure, I could then be able to give a LOT more to charity. Also, I would imagine she would actually prefer to have her father back than to have his money. (I don't know anything about their family so it is pure assumption on my part.)

The amount being assessed is based on the original 1099R from the credit union that indicated that the entire IRA was distributed to my client. It was not. It was converted to an inherited IRA. However the credit union did that conversion wrong and did not correct (correctly *) it until 2013 after the CP2000 was issued. *There was a correction done in 2011 at the original transfer -- unfortunately that one was done wrong. I thought it was corrected properly at the time and that is why I prepared the 2011 return showing the amount as a rollover and not taxable. I know now that "rollover" was not the proper term. When the credit union made the correction in 2013 they realized there should have been an RMD for the mother. Since my client is the only name on the account now, they issued a corrected 1099R showing the RMD instead of the entire IRA. I hope that summary is more clear.

I'm an RTRP - not that it matters anymore.

I'm not sure a tax attorney would be worthwhile. The bill is currently $2155.

I'm sure they just crossed in the mail since I gave the forms to my client on the evening of Friday 7/26 & the IRS letter is dated the next Monday. Thanks for the heads up Jainen. I'll see what advice they give me on the phone. I have no desire to go to tax court, but I do want to help my client get this resolved. I'm really getting concerned.

Client just received "Notice of Deficiency" dated 7/29. Looks like I get to call IRS after all.

Enjoy your trip. If I only left for the occasional 2 week excursion, I would probably tell my clients the same thing. But since I like to go for a month or so at a time as much as possible between May - August & November - December, I really can't call them vacations. Just change of scenery. And if I have to work anyway, I'd rather do it with a view of the beach or forest or lake... than of my neighbor's house.

I did tell him that to let me know if he received anything from IRS. Whether I'm in town or not. Just because I enjoy traveling, doesn't mean I don't keep working my 30 hours per week minimum.

Absolutely! I sent cover letter explaining what happened, 1040X, CP2000 (with the authorization for IRS to discuss with me), & new 1099R (just in case they hadn't matched up to it yet). I was pleasantly surprised that the client said he hadn't heard anything else from IRS even though the due date on the CP2000 was June 5. Maybe they did match up to the new 1099Rs the credit union sent in late May? Naaaahhhh. I had been very concerned that the credit union response did not go with the CP20000. If only I had been in town to supervise the process. (No, that doesn't mean I'm going to give up traveling - simply that my clients need to know that I am still available.)

Ok, sounds like they did that part right. I thought I had read something about not being required since she passed away before Sept of the year after she inherited it. But I didn't delve in too deep since the credit union had already done it. I gave the 1040X to the client Friday night. I hope IRS has no more questions!

All good advice. I think (hope) I got lucky and won't need to worry about it afterall. I'm a form believer in Murphy's law. If I hadn't asked this afternoon, I wouldnt have gotten the info I needed. But now that I got all these great suggestions, I may not need them- well at least for now. Still good to know! Thanks

Good point!

I FINALLY got the rest of the story from the credit union. (I'm really surprised how long this took.) The 1099R that the client got last month was a "corrected" 1099R. It now shows just the RMD. (Will IRS know that this replaces the one that showed the full distribution? Who knows.) I had thought it was an addition to the the original 1099R rather than a replacement. When the IRA was inherited in 2011 it initally got put into his own IRA. The person realized this immediately and then moved it to a separate IRA. When they looked into it after the CP2000, they realized it was never designated as a beneficiary IRA. (In her defense, this was her 1st bene IRA and she followed her supervisor's instructions. Too bad the supervisor didn't know how to do it either.) So, in 2013 this got corrected to a beneficiary IRA. At this point, they realized there had been no RMD for the mother (decedent) in 2011. So, they made the RMD in 2013 and issued a "corrected" 1099R showing the RMD instead of showing the whole IRA as a distribution. But since the mother's name is no longer on the account, they issued the RMD to my client. (Edit - and they marked it "Total Distribution") (And he should have started his own RMD in 2012, but I guess we'll address that next.) So.... when I'm writing my explanation to the IRS, should I specify that the RMD is really for his deceased mother? Since it was distributed after her death, it would still be IRD to my client. I want to try to explain it to IRS as simply, clearly and accurately as I can without causing other problems. And, as you can tell from my posts, I tend to have problems keeping things concise. (And when I try, it just backfires on me.) I'm going to amend the 2011 return and send it with the CP2000, even though the due date of that was in June. I'm not sure if IRS did match up the corrected 1099R to the CP2000 notice. I hope I will not need to call them to get this clarified. But it is pretty confusing.

Actually the document I was the authorization page of the CP2000. But if my cover letter and 1040X explanation suffice, I hope to not have to call. If not, I hope it will "buy me some time" so I can call later and not Monday. If that works, then they should hopefully have the authorization from the mailed CP2000 response. I did consider faxing from a Kinkos or Staples, etc. but was a bit wary of having my IRS conversation in a public building.