FIRST EVER. HAVE YOU EVER HAD THIS? HOW TO PROCEED??

[komtax]

Did client's return, and client was supposed to receive about $7K+ federal refund. About almost a month later "where is my refund" was showing the vague " being processed." After what seems tens of phone calls from client basically harassing about her refund, I gave her an appointment to come and call the IRS ( she had received her state's refund). When she came in, just before calling, I looked once more at "where is my refund". This times it says that that there was an adjustment made to her return, that she would receive 30K+ ( thirty thousand +) dollars, and get a letter in mail... I assumed that the data entry technician for IRS made a typo and told client to expect less money than expected that she would get a letter, to bring to me etc.... TODAY imagine my surpise when she actually had over thirty thousands deposited to her account. Anybody has seen something like this before? I know it's error on IRS part. Client is low income and has many rent arrears. lots of temptation there. How would you handle this. JEN.

[MsTabbyKats]

Well...I would tell her...in writing...that this must be an IRS error and not to spend the money.

Then I would call the IRS and ask them to review it.

[Terry D EA]

I agree your client needs to be ready to return the money to the IRS. Even if they don't ask for it now, eventually they will. I would then call with the client present the practictioner priority line to get someone to review the return.

[Guest Taxed]

Assuming you did the return calc. correctly, I would advise her to keep $7K her Fed refund and write a check payable to the US Treasury for the balance and mail it certified if that letter from the IRS does not arrive in a week. The reason to get it out of her account is to fight an interest demand later on.

[jklcpa]

If you are using ATX, did you reopen the return to see that the transmitted return matches your file copy? It is possible that the program deleted some data. That was a problem with unemployment benefits before some of the updates came out. Also, have you rechecked the return to verify all the figures and that you don't have a typo somewhere?

[Catherine]

A client of mine, several years ago, received an unwarranted refund check in the mail. HE was able to fight the inevitable interest charge on the "overpayment" by presenting back to them their un-cashed check.

If your client wishes to take her $7K and return the rest, I strongly recommend that she take a check IN PERSON to the nearest IRS office and get a signed & dated receipt from them.

[Pacun]

Clerical error? We use efile.

[kcjenkins]

Since it was a direct deposit, there is no way to just "don't cash the check". I'd advise that you read the letter of explanation before doing anything else, but STRONGLY urge her not to spend more than the 7K.

[komtax]

Thanks everybody for a quick feedback. You guys/gals are great! I took miss Tabbykats advice and called IRS and requested a manual review. IRS acknowledged it's error ( computer error ). It was prompted when their computer recalculated the additional tax credit on the return ( supposedly ATX software calculated it wrong--- there was no itin on the 8812, if you re wondering ). How to resolve for future reference per IRS instructions: 1) alert IRS of the discrepancy so they can manually track the issue 2) if taxpayer receives a paper check---write void on the back of the check and return to IRS ( preferably nearest office 3) if its a direct deposit, cut IRS a check for the overpayment, with a letter explaining the discrepancy. That way the tax payer is covered from interest issues. Note: if IRS is not alerted to manually monitor this overpayment return process, its computer may spit out the returned payment to the taxpayer again! Thanks again Jen.

[Kea]

Thanks for sharing this experience. I have not had a client with this issue, yet, but I'm sure it will happen some day. It's nice to hear what IRS thinks is the proper procedure. (Assuming you can believe them on the phone? )