IRS Notice CP 12

[Terry D EA]

I have never seen one of these notices. One of my client's received one today. The IRS claims we calculated the tax on the taxable amount of income minus the deductions and exemptions incorrectly. I did not calculate it incorrectly and the amount entered on the return is 100% correct. The IRS has recalcualted the tax and is claiming the tax was $20.00 less and adjusted the client's refund. The IRS said this could have been caused by incorrectly entering the amount for the repayment of the first time homebuyer credit. This client is in the 4th year of repayments at $500.00 per year for the next fifteen years. This amount too was entered correctly. The mistake is clearly on the part of the IRS. I ran the tax amounts from the tax tablea and percentage method and again no error on my end. What to do with this?

[JohnH]

I'd tell the client to keep the $20 and forget about it. If IRS ever discovers their mistake, they will ask for the money back.

Or,if the client wants me to straighten it out, I will write all the letters they want at $50 each. They can decide when enough is enough.

[kcjenkins]

Agree, it's not worth a letter, over a $20 error IN THE CLIENT'S FAVOR. They will never hear a word again on it.

[Terry D EA]

I agree with both of you and that is exactly what I told this client. I guess what really irritates me, and maybe it shouldn't, is how they word the letters stating that the taxpayer incorrectly calculated the tax. This return was really simple and straight forward so I don't know how THEY screwed it up. Gotta love that guilty till proven innocent thing.