IRS Error in Your Favor
I just ran across a new story about a Tennessee woman (Debra Martindale) who checked her bank balance only to find that she had erroneously received a $25,289 tax refund when she was expecting just $4,800. Concerned that the IRS would eventually discover their mistake, and then come after her for interest, penalties and/or fines, she called the IRS to report the error. However the representative the she talked to insisted that the $25k refund amount was right:
After a 30-minute phone conversation, in which Martindale said she continuously disputed the refund and the IRS representative kept insisting the money was hers, Martindale hung up. ``I didn't want to make the IRS mad,'' she said.
About two weeks later, Martindale and her husband got a letter from the IRS stating that they had changed the total estimated tax on their return, resulting in a refund of $25,289.09. However, the balance of the information in the letter made it clear that something was wrong... In fact, the letter indicated that she had paid taxes roughly equal to her income for the entire year. But it wasn't until she contacted an IRS taxpayer advocate instead of going through the 'normal' channels that this all got straightened out. It remains unclear what exactly happened, but it appears that the IRS somehow mixed and matched information across returns.
So... What would you do? Would you report the error? And if you were met with resistance, would you persevere and force them to admit their mistake?
[Source: The Daily Times]
--
Please CLICK HERE to read/leave comments on this entry
"IRS Error in Your Favor" was first published at fivecentnickel.com
As a followup to my post about withdrawing contributions from your Roth IRA without paying taxes or penalties, I wanted to point out a small(ish) glitch that was brough to my attention by a reader... Withdrawals from your Roth IRA may make you ineligible to ... Read
I've written on several occasions about the fact that you can withdraw 'regular' (i.e., annual) contributions to your Roth IRA at any time, and for any reason, without incurring taxes or penalties (e.g., here, here and here). A recent commenter, however, challenged the veracity of ... Read
With just two days to go before the tax filing deadline, keep in mind that audits have been on the rise in recent years. In fact, according to an article from H&R Block's Tax Advice Central, American have a 1 in 107 chance of being ... Read
Aside from being the day your taxes are due, April 17th marks the cutoff for IRA contributions for the last year. And I'm here to tell that if there's anyway possible that you might have the money to contribute to a Roth IRA before the ... Read
The story doesn't even make sense. How can one make such a big tax payment and don't know it? If my whole paycheck went to uncle sam, I would be a moron to not know it. And as it was explained, how did the IRS make an error? It was the taxpayer, wan't it?
john: She didn't make a big tax payment. That's the whole point. Her withholding was (apparently) normal throughout the year, and she filed as usual. However, the IRS erroneously made an enormous deposit when it came to pay out her deposit.
Okay, it was awkwardly explained in the story as to who was at fault. Anyway, it's best to come clean with the IRS. Once a bank deposited $200,000 to someone's account and the person refused to return it. The police was summon on charges of theft. Months later the person returned it. Who needs that type of trouble from some policing agency?
John - It was not awkwardly explained at all; Don't give nickel a hard time because you didn't pay attention the first time you read it.
The author states at the end "It remains unclear what exactly happened..", but a flake like you comes out knowing exactly and definitively what the author and a highly educated man like me don't. Give me and the world a break smuck.
John - I didn't mean to offend you; I didn't realize you were so sensitive. I guess I am a flake, as I don't know what a "smuck" is. It is a bit ironic when a "highly educated man" says he "don't" know something. I also am educated, though I would never call myself brilliant or even above average. And yes, I did know exactly and definatively what the author said in this original post.
I am a lawyer and a millionaire and I can say without a doubt that I don't know anything about anything. Especially when I'm not getting paid to.
