Client received Notice of balance due from IRS

[Janitor Bob]

I filed taxes for client in 2005 (for filing year 2004)....she paid her balance due (check sent with return) in April 2005. Two months ago, client received a notice of balance due (with interest added) for that amount due from filing year 2004.

I mail a response and copy of cancelled check.....Client receive letter from IRS today showing amount paid in full....What the ?!?! is the IRS doing with our money?!...and had it been a valid amount due, why did IRS wait so long to send a notice?

Jeesh!! Here we go...another fun season!

[kcjenkins]

Just our tax dollars at work, JB. They get more 'efficient' all the time, don't you know?

Hey, didn't you read about all the CP-22a sent out in error?

I just had an interesting conversation with the practitioner priority group regarding a recent notice sent to a client claiming that they were in a presidential declared disaster area and the interest/penalties were reduced for 2007. The notice, however, was charging them $ 182.75 in additional penalties.

Problem was that the 2007 return was timely filed at 4/15 and so was the balance due. The 2210 calculated the correct penalty and it was paid with the return.

Curious as I was, I could not figure out why they would be asking for more money, particularly this far down the road. Well, I had a few moments and called the PPG. It turns out that she could not explain it either and reversed the penalty and will refund the $182.75.

I asked what the problem was, she claimed that they had to recalculate the penalty. I replied, then, my tax software was incorrect? She then said, "No, uh, they told us that if we got any of these inquires to reverse the charges and refund the amount." She also said the IRS tried to stop the notices but many went out before the stop was put in place.

I asked if a letter would be sent to the taxpayers detailing the adjustment and showing no balance due.

Her answer, "No".

I asked if the penalties will be automatically adjusted out for people who received the notices but did not call the IRS or inform their preparers.

Her answer, "No".

I asked if refunds would be sent to those who erroneously paid if they or their reps never contacted the IRS.

Her answer, "No".

I guess I will be asking every client I see in the next few months if they received one of these notices and paid without telling me. I'd advise you all to do the same.