can i do anything about error on 2011 return

[schirallicpa]

I have had more unique situations this year!

Client has had levy on income because of 2011 income tax change.  A 1099 was reported in her name (ss#) that should have been reported to a non-profit that she was associated with.  She did not report on her return, and the IRS has sent her several notices regarding it.  She has tried to argue the situation on her own, but has gotten nowhere.  Has not filed 2013 and 2014 returns because she is afraid IRS will take more of her money (refunds).  So I have prepared those 2 returns.  and filed an ext for 2015.  But I don't think I can do anything about 2011.  (and honestly, it's not a huge amount of tax.)

Any thoughts on this one?

[RitaB]

I think I'd prepare an amended return if you can get a copy of her original 2011 and the letter showing how IRS adjusted her 2011 return.  The deadline to claim a refund has passed, but you're not doing that.  I don't think there is a deadline to correct an incorrect return.  I would correct the IRS adjustment. 

I would do whatever I would have done if I had dealt with the situation on the original return.  Meaning, complete the Schedule / Form IRS wants to see (is it Sch C?), enter the income amount reported on the 1099 (is it 1099-Misc, box 7?).  Then, subtract the amount with an explanation.  Obviously get a POA in the meantime. 

Sometimes it's all about the paperwork.  Give them some paperwork.  I realize answering the notice would have been the thing to do, but I'd just do the amended return at this point.

 

[Max W]

I agree 100% with Rita. If tax is owed on any year, an amended return can be filed.  

 

[schirallicpa]

That's what I was thinking I could do, but I didn't know if they would still accept it.  thank you.

[Catherine]

My general procedure is to drown them in paperwork and assume I am explaining the situation to a 8th-grader who doesn't give a flip (make it simple, make it easy to agree with your position, give them all the backup they need if their supervisor asks questions).  As a result, I have a high percentage of requests granted.  

[SaraEA]

It depends on the kinds of notice the IRS already sent.  Has the client been issued a notice of deficiency?  Has the time to respond passed?  In that case, get your POA and call to explain the situation and ask what you need to do to fix it.  Any corrected return you might have to file will not go through the normal channels but to a "reconsideration" unit, or something like that that handles cases where deadlines have expired.  I'm not sure a corrected return is needed in this case, just proof that the income reported to the client actually belonged to the nonprofit.

It boggles my mind how smart, rationale people can ignore IRS notices like so many do.  Do they really think that the IRS will just go away?  I've had many clients come to me (AFTER the IRS has attached their pay, took their bank account, filed liens) with a few IRS letters and you can tell just by the sequence numbers they have a whole drawer full more at home.

[joanmcq]

Ask for an audit reconsideration. It was likely a CP2000 notice from way back that if she responded, didn't include enough info or the right info, and went to NOD.  

On a similar note, I saw a new client yesterday that had a partnership with her husband for his roofing business; she did the books and all of the admin stuff. She left him in August 2010, and he still filed a partnership return for 2010, 2011, 2012 & 2013, issuing her K1s for half the biz income, and reporting distributions she never received. He's been filing MFS on half the income until 2014 when he filed as an SP and attributed all the income to himself. IMHO, the biz defaulted to an SP in Aug. 2010 when she walked away. She hasn't filed since 2009 because she doesn't think she should have to pay on his income. Has anyone ever had to dispute a K1?  She is in the middle of the divorce now.    Thought perhaps file with a disclosure and then fight it. 

[RitaB]

On ‎5‎/‎31‎/‎2016 at 9:17 PM, SaraEA said:

It depends on the kinds of notice the IRS already sent.  Has the client been issued a notice of deficiency?  Has the time to respond passed?  In that case, get your POA and call to explain the situation and ask what you need to do to fix it.  Any corrected return you might have to file will not go through the normal channels but to a "reconsideration" unit, or something like that that handles cases where deadlines have expired.  I'm not sure a corrected return is needed in this case, just proof that the income reported to the client actually belonged to the nonprofit.

I agree that IRS originally most likely did not want an amended return, just a response, but since the taxpayer has been messing around with it herself for years (we know this because she's afraid to file 2013, 2014, and 2015), and I can amend a return faster than I can call and be on hold and explain and discuss and prepare an answer, preparing an amended return seems far easier to me.  I believe they'll take it and eventually the situation will be resolved without further aggravation to me.  And I'll be honest, aggravation to me is a consideration.

[RitaB]

I found this thread from 2009 and enjoyed reading it very much.  Might be helpful somewhere along the line for someone.  And like Tom said in the thread, "the fact that IRS has to work harder is not my issue."