Catherine Posted March 31, 2009 Report Share Posted March 31, 2009 Have a client who got a CP2000 notice for 2007. There was indeed income missed and the notice, as far as we can figure, is correct. So the notice has an amount of extra tax plus some interest. Before I have my folks send money in, how likely is the IRS to take this year's refund and apply it to the CP2000 notice balance? We're trying to get through this with as little financial disruption to these folks as possible. If they pay the whole amount and then their refund gets applied as well, then they have to wait ?? much longer to get money back, and what they get won't be direct deposit, either. OTOH, if the refund won't be touched, they should pay the total and not get any more interest hit. Any guidance would be appreciated. I tried calling and spoke with someone who was talking 120 mph in a nasty tone of voice -- and in the end wouldn't/couldn't tell me what I needed to know even though I have the "permission to talk with preparer" box checked on both returns (the '07 with the notice and the already-e-filed '08). Thanks. Catherine Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 31, 2009 Report Share Posted March 31, 2009 How long do you have to respond to the CP-2000? You could always request additional time to respond, stretching it out long enough to be sure they receive their refund for 2008 before sending in a written reply. I don't think I've ever been given less than 30 additional days just by making a phone call, even when the issue was a slam dunk. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 31, 2009 Report Share Posted March 31, 2009 All of mine so far have the same reply date of Apr 8.; some are right, some we can correct and some are a mixture. Primarily, sales of stock and dividend income that were not reported. Most of the stock sales are a loss. I plan on calling the contact person named on the CP2000 before I file or do anything. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 31, 2009 Report Share Posted March 31, 2009 I had one of these dropped on my desk last friday. Apparently, my client overlooked the 23K retirement income he took from a 401K plan and forgot about or lost the 1099C from Dell Computers. The W-2 forms that I have stapled to last years return match the figures on the tax form but not what the IRS has. Now they call me and can't believe the owe 8K plus interest and penalties and that someone has had to make a mistake. Well guess what, someone did. I haven't told them yet that they will owe the state as well. How in the world do you overlook these type items? The last time this happened, the client blamed me for forgetting to input the information they didn't provide. I guess they didn't like it when I told them the light in my crystal ball had burned out and I couldn't find a replacement lamp and the ball had brokern when it fell into the trash can. I have not seen them since which is probably a good thing. As for this one, I said oh well, another one bites the dust. Terry D. Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 31, 2009 Author Report Share Posted March 31, 2009 I had one of these dropped on my desk last friday. Apparently, my client overlooked the 23K retirement income he took from a 401K plan and forgot about or lost the 1099C from Dell Computers. The W-2 forms that I have stapled to last years return match the figures on the tax form but not what the IRS has. Now they call me and can't believe the owe 8K plus interest and penalties and that someone has had to make a mistake. Well guess what, someone did. I haven't told them yet that they will owe the state as well. How in the world do you overlook these type items? The last time this happened, the client blamed me for forgetting to input the information they didn't provide. I guess they didn't like it when I told them the light in my crystal ball had burned out and I couldn't find a replacement lamp and the ball had brokern when it fell into the trash can. I have not seen them since which is probably a good thing. As for this one, I said oh well, another one bites the dust. Terry D. I had a momentary flash of brilliance and checked the "Where's My Refund" site for info. My folks' refund got direct deposited last Friday, so they can send payment in full per the letter. Nice to know I'm not the only one whose clients had letters with response dates of 4/8. Catherine Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 31, 2009 Report Share Posted March 31, 2009 I don't want to hijack the thread, but I have a similar question. Couple are getting divorced now. Wife is my client for '08 & MFS. After the '07 stimulus payment was applied, they still owe for '04 on unreported income of the husband. They also owe for '06 because they filed that return without any payment. Wife is paying both prior yr bals this week. How long does is usually take for IRS to apply checks for back tax years? I haven't worked up wife's '08 return yet, but if she has a refund, should I put it on extension? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted April 1, 2009 Report Share Posted April 1, 2009 Yes, I would definitely put it on extension. It's much easier to wait just a bit longer, and get the refund, than it is to have them take it and wait around to get it back. You can check with the help desk in a few weeks, to see if the payments have been applied. Quote Link to comment Share on other sites More sharing options...
jainen Posted April 30, 2009 Report Share Posted April 30, 2009 >>the light in my crystal ball had burned out<< Burnout is always a problem by March 31 in our business. But in my opinion the old crystal ball is not as illuminating as one might think. I prefer the technology of the dark ages--a paper organizer guiding a personal interview. But the original post had a good question--when does a CP2000 become a tax assessment? The IRS sheds light on this at http://www.irs.gov/individuals/article/0,,id=136857,00.html. "The CP 2000 is only a proposal that offers you an opportunity to disagree, partially agree, or agree with the proposed changes. We haven't charged any additional tax at this time." Quote Link to comment Share on other sites More sharing options...
jainen Posted April 30, 2009 Report Share Posted April 30, 2009 >>I have the "permission to talk with preparer" box checked on both returns (the '07 with the notice and the already-e-filed '08).<< That '07 permission had expired on 12-31-08. I'm sorry, but I understand the IRS agent's position on this. It was unreasonable to ask her about the CP2000 without a power of attorney. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 30, 2009 Report Share Posted April 30, 2009 Agree with jainen on both issues. You need a POA, and the refunds can't be snagged until the tax is actually assessed. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 30, 2009 Report Share Posted April 30, 2009 A CP2000 is not a tax bill. It is a proposed change to the tax return. Until the tax is actually assessed, the IRS cannot take any refunds against it (there are exceptions for flight risks, but the commissioner has to approve them). So if you are worried about the refund, get an extension of time to provide the information. They will normally give you the time if you just say the client is compiling the documents and you have scheduled an appointment to review and respond to the notice. An extra 30 days should get the refund in the bank unless they are holding it for another reason. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted May 1, 2009 Report Share Posted May 1, 2009 I must say that regardless of what the letters say and or what we feel will or should happen is only an assumption at best. I had another client that received a CP2000 followed by an assessment with assurance from an IRS rep that the refund would indeed be snatched. You guessed it, the client got the full refund. I do agree with Jainen on both issues but the experience that I have with the IRS tells me to always CYA, notes of phone coversations, etc as the situation will get handled any number of ways. My step son's refund was adjusted by the IRS and they claimed the EIC was calculated incorrectly. It was not and I have come to believe the IRS has different programing in their calcualtors than mine have. No matter what, you can't trust them and always get an extension of time to prepare. Terry D. Quote Link to comment Share on other sites More sharing options...
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