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Is this Bold or Stupid?


Edsel

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Keep in mind that my mindset is not "boxed in" by conventional thinking, so I am inclined to provoke the beast.

IRS has completely botched up beyond recognition my taxpayer's 2014 and 2016 returns.  I have already charged the taxpayer $1200 in writing letters, telephone, and other attempts to fix the problem, which was created and perpetuated by the IRS.  They have been sitting on some $15,000 in refunds for those two years.  I have not been successful in drawing any more attention to this by the IRS.

What I propose doing:  File the taxpayer's 2018 return, showing the $15,000 as an estimated payment for 2018.  When the IRS figures out it hasn't been paid in, they will create a form letter, and this will draw attention to the problem.  Hopefully, someone will revisit the 2014-16 mess and straighten it out.

I'm sure purists will disagree with me, and tell me I could face jail time.  Government in general is not accountable for the misery they create, and the IRS is no exception.

Thoughts??

 

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Have you/client tried the Taxpayer Advocate? Friendly, local Congressperson? Maybe even a tax attorney, depending on the issue(s).

I think the form letters are generated by a computer, and you won't get a real person involved, certainly not the level of person you need.

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I've been told the Taxpayer Advocate only represents poverty-level people.  This taxpayer is single and makes six figures.

I have had success with the Taxpayer Advocate, but was told when the IRS cut back their staff in 2013-14, the taxpayer advocate was swamped, and had to find ways to restrict their new cases.

 

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8 hours ago, Edsel said:

IRS has completely botched up beyond recognition my taxpayer's 2014 and 2016 returns.  I have already charged the taxpayer $1200 in writing letters, telephone, and other attempts to fix the problem, which was created and perpetuated by the IRS.  They have been sitting on some $15,000 in refunds for those two years.  I have not been successful in drawing any more attention to this by the IRS.

Could you give some  detail?  How did the IRS botch those returns? 

 

8 hours ago, Edsel said:

What I propose doing:  File the taxpayer's 2018 return, showing the $15,000 as an estimated payment for 2018.  When the IRS figures out it hasn't been paid in, they will create a form letter, and this will draw attention to the problem.  Hopefully, someone will revisit the 2014-16 mess and straighten it out.

That might just create another letter and another problem, besides an inaccurate tax return.

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Sorry Edsel, but I vote for stupid.   Love you man, but you are voicing frustrations, not practical tax solutions.   You cannot ethically sign a tax return that contains a position that you know to be incorrect.   The taxpayer did not make estimated payments during the year, and to tell the IRS they did is to falsify the tax return.

Agree with the rest that the TPA is the best first route.   Then explore your options in court.  Get some help if you need it, from someone you trust.

Good Luck

Tom
Modesto, CA 

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Based on responses, I'm inclined not to try this.  I'm not being cowardly to back off this, it's simply that it won't do any good.

I was going to spare the readers from getting into the gory details, but there appears to be some interest in how this account became FUBAR.  Read ahead if you're interested.

It started when IRS sent a letter stating they received the 2016 return but there were errors in it.  (There weren't any and they didn't elaborate with any sensible language).  Two months later they sent another letter stating they were not in receipt of the 2016 return.  Not a great way to start a case.

A prior preparer left a huge (half million $) loss on her 2015 return, without taking any action on handling the NOL which resulted.  I rolled the NOL forward to 2016, but IRS refused because the taxpayer had not yet filed a 2016 return (see above).  They explained that the NOL had to be rolled back.  To simply avoid arguing a useless point, I decided instead to "roll back" the NOL to 2013.  This brought another letter rejecting my 2013 amended return because the prior preparer had indicated a desire to roll forward the 2015 loss and rolling back was against the desires of the taxpayer on their 2015 return.  A number of phone calls to IRS followed, and I charged the taxpayer for all my fuss and bother.

This half million $ NOL was enough to negate all the income between 2013 and 2018 and there will be a little bit left over for 2019.  We filed amended returns for 2013, 2014, and 2016.  The loss was timely included for 2017 and will be for 2018.  Next comes a letter from the IRS stating the rollforward to 2016 was incorrectly calculated, and would we please read on page 2 the correct calculation from the IRS.  The "corrected" calculation was exactly as I had proposed on our 2016 amended return.  They are withholding money from the amended returns from 2016 and 2014, although they had never contested 2014.

Is this FUBAR enough to provoke me to vent?

 

 

 

 

 

 

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I'd try the Taxpayer Advocate first, as others have recommended.  If that does not get prompt attention, then tax court.  The thing is, that if a tax court case is filed, the FIRST thing the court does is send the case down to high-level Appeals with strongly worded recommendations to RESOLVE the issue, so the court doesn't have to hear the case.  That level is peopled with competent problem-solvers who do NOT want the court to verbally dope-slap them, later, for failure to resolve.  Besta bote woilds!

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Before Edsel's latest comments I had thought of TAS, as well as some other measures, but seeing the absolute complicated mess that is involved, I would have little faith in having the TAS  resolve it.      I had a case in which involved an amended return and it took the TAS 18 months to resolve it.    I would strongly lean on going directly to tax court.  It will take its time, too, what with getting a date for the court and, then, if appeals doesn't resolve it , waiting for the court's decision.    

The client can represent them-self at tax court, but at least consulting with a good tax attorney would be worthwhile, as there could be legal issues involved here in the way the IRS acted.

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In order to petition the tax court, you will need to dispute a notice of deficiency or determination.  It sounds like you have not got to that point and  are still in a cat and mouse game.

When you get to that point, the case is assigned to an appeals officer.  You do not need to be "admitted to practice before the tax court" to deal with the appeals officer.  I dealt with one a couple years ago.  Case was resolved in taxpayer's favor within 6 months of filing petition following several correspondence and final telephone conference.

 

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If there is no deficiency, Taxpayer can sue for refund - 

28 USC § 1346 - District courts, concurrent with the U.S. Court of Federal Claims, have original jurisdiction over the following actions commenced against the United States:

  1. tax refund suits;

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Edsel:

You quoted this:

Quote

A prior preparer left a huge (half million $) loss on her 2015 return, without taking any action on handling the NOL which resulted.  I rolled the NOL forward to 2016, but IRS refused because the taxpayer had not yet filed a 2016 return (see above).  They explained that the NOL had to be rolled back.  To simply avoid arguing a useless point, I decided instead to "roll back" the NOL to 2013.  This brought another letter rejecting my 2013 amended return because the prior preparer had indicated a desire to roll forward the 2015 loss and rolling back was against the desires of the taxpayer on their 2015 return.  A number of phone calls to IRS followed, and I charged the taxpayer for all my fuss and bother.

Seems to me... if the prior preparer did NOT elect the carry back of the loss on the 2015, then all the stuff you did with 2013, 2014 and maybe even 2015 are pointless.

For 2016?  You have your allowable carry forward, that might carry forward to 2021 or so.

The IRS can be  PITA, but sometimes, they are correct.

An NOL can not be rolled back after the return is filed and the election to roll back is not elected.

Sorry.

Rich

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1 hour ago, Richcpaman said:

Seems to me... if the prior preparer did NOT elect the carry back of the loss on the 2015, then all the stuff you did with 2013, 2014 and maybe even 2015 are pointless.

Thanks for your response Rich.  You are indeed one of the best and most accurate members of this forum.

I did try to carry forward the loss from 2015 to 2016, but this was disallowed because the IRS claimed they had no return for 2016.  The letter denying us the carryforward allowed us to carry back the loss to 2013.  When they injure the situation as bad as they did, it's hard to get the train running on track.

 

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Rich, I'm confused by your statement that an NOL can not be carried back if the election to roll back is not elected.  

Whether an individual or a corporation, the election is to forego the NOL carryback.  Without that election, any NOL must first be carried back before any carryforward is calculated.  If the prior years have no income to which the NOL can be applied and if the election to forego is not filed, the taxpayer must still show the calculation that the carryback to prior years has been considered and results in no reduction in the NOL before carrying it forward. 

I haven't weighed in here until now because I'm still unsure of what was or wasn't elected because of the way Edsel worded his response shown below.  Does "indicating desire" mean that the election to forego carryback was included with the 2015 return? 

Quote

A prior preparer left a huge (half million $) loss on her 2015 return, without taking any action on handling the NOL which resulted.  I rolled the NOL forward to 2016, but IRS refused because the taxpayer had not yet filed a 2016 return (see above).  They explained that the NOL had to be rolled back.  To simply avoid arguing a useless point, I decided instead to "roll back" the NOL to 2013.  This brought another letter rejecting my 2013 amended return because the prior preparer had indicated a desire to roll forward the 2015 loss and rolling back was against the desires of the taxpayer on their 2015 return.  A number of phone calls to IRS followed, and I charged the taxpayer for all my fuss and bother.

 

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