I got a notice from Dept. of Revenue MA. It''s about a Notice of Intent to Assess my 2007 MA state tax return. It says that if there is no response within 30 days, the withohding of $3367.00 will be disallowed pursuant to G.L. c. 62C SS 26(b. What does this mean? What should my next steps be?
Optional Information: Waltham, MassachusettsAlready Tried: I have tried searching online for possible solutions on dealing with the problem. I have also considered looking for a lawyer and it would be great if I could get some advice here on how to proceed next.
HelloCustomer Thank you for coming to Just Answer and allowing us to help you. Did you prepare your own taxes or did a tax preparer do it for you? If a tax preparer prepared your 2007 taxes, call their office. Many tax preparers close most of their offices in the summer, but the phones should be forwarded to an open office. If you had a preparer, call them, make an appointment, and take the letter and your copy of the 2007 tax return to them as soon as possible.
If you prepared your own taxes or used software and don't have a preparer, then the first step that you need to take is to contact the MA Department of Revenue. If they gave you a specific person's name and/or phone number in the letter, contact them as soon as possible. If they didn't give you a specific person, call the general number for their department (you can find it in the government section of your phone book) and ask to speak to the person handling your case. Make sure that you understand the problem correctly. Based on what you've said, it sounds like they need proof that the withholding was actually withheld by the state in which you filed. Find all the documents that list the withholding (w-2s, 1099-Bs, 1099-R, Social security statement), basically look at all the documents you used to prepare your return. Make sure that you have all the papers that list state withholding and make sure that all of the money withheld says that it went to the state of Massachusetts. If you can prove all of the $3367 was withheld and sent to the state of Massachusetts, then make copies of all the papers that list the withholding and mail it to the person handling your case along with a cover letter that says that you disagree with their disallowing your withholding.
If you can't prove that all of $3367 was withheld but some of it was in MA or if some of it was sent to another state instead of MA, then prepare or have a tax professional prepare an amended return for MA and, if some of the money was withheld by another state, a return for the other state. Send the amended return with a cover letter explaining the situation to the person handling your case.
If you can't prove any of the withholding, then you need to find a tax lawyer or a tax professional that works with the IRS (they're called Enrolled Agents and you can find them at most of the major tax chains - H&R Block, Liberty, or Jackson Hewitt) or a CPA and have them negotiate as good of a deal with the IRS that you can. In that case, you'll probably end up owing money to the IRS, but you can work out an installment plan.
Just make sure that you contact the Department of Revenue, look up your papers, and send them a rebuttal letter within 30 days. If that won't be possible, once you find out who is handling your case at the Department of Revenue, send them a letter saying that you disagree with their finding and that you are gathering the paperwork to prove the withholding. Make sure you at least send a letter disagreeing with their finding within the 30 day limit.
Good luck. I know that letters from tax authorities are scary. You may just want to find a tax preparer or CPA that is currently working and pay them to deal with the whole thing. But, it really shouldn't be as bad as it seems, so take heart and just be persistent.
Reply to Jesse Hand's Post: Hello Jesse,
Thanks for your prompt reply. You've addressed my problem in the general sense, I realize, because I haven't supplied you with enough information. I have included the important portions of text from the letter that I received from the Department of Revenue - Notice of Intent to Assess. I would actually prefer to email you the letter so you can get a clear understanding of what's been asked of me. If that's okay with you, please provide me with an email address so I can send it along. Please rest assured that I will accept your answer (thereby getting you the payment) once I can get more clarity with regards XXXXX XXXXX position.
Excerpts from the letter...
You are receiving this notice because your 2007 Massachusetts Income Tax Return has been selected for verification. In order for us to resolve this issue, it is necessary that you provide the following information and/or documentation:
1) A completed copy of your 2007 Federal Income Tax Return including all schedules, attachments and all forms to substantiate any witholding amounts shown on your return.
2) A copy of your pay stub issued by your employer.
3) If an Individual Taxpayer Identification Number (ITIN) was used for anyone listed on the return, including dependents, please submit a copy of the letter issued by the IRS to verify the number(s).
If you wish to discuss this notice with the Department of Revenue's Audit Division, please call ... If someone will be representing you, you must complete and submit a Power of Attorney form.
If you do not respond by 30 days from the date of this notice, the witholding of $3,367.00 will be disallowed pursuant to G.L. c. 62C S 26(b)
If you would like to appeal, you have the right to a pre-assessment conference, to request settlement consideration or both, with the Office of Appeals. The request must be made within 30 days of the date of this notice.
----END OF LETTER ----
Facts from my side...
1) I did have an agency prepare my tax return and I contacted them with this letter. They asked me to send a) Copy of Federal Tax Return b) Copy of Notice c) Copy of W2 d) Copies of pay stubs.
I was further told by them that "The Dept of revenue only wants to confirm the withholding of taxes on your W2 and tax return. Once you forward all the requisite documents they shall evaluate the case process your return". But I still wanted to seek a second opinion.
I am not sure about how many pay stubs I need to be enclosing for the year 2007. I have all of them for the year 2007, but the notice mentions 'a paystub'. So I don't know if providing all of them is giving too much information, especially since I have was on a long vacation at the start of the year and so wasn't paid for that particular month. Please advise.
The other thing I'd like to know is if I really have to go for this audit. It is called a Desk Audit in the notice. There is no statement that says that I need to be there. It simply asks for more information via mail. I wouldn't be too comfortable dealing with them directly since I'm not sure of the intricacies of the tax laws.
From your reply - "If you can prove all of the $3367 was withheld and sent to the state of Massachusetts, then make copies of all the papers that list the withholding and mail it to the person handling your case along with a cover letter that says that you disagree with their disallowing your withholding". - I do have all the documents that I need to show that the witholding in MA state was indeed 3367.00 (the amount that shows on my W-2 is 3366.92). I can copies and send them. Is the cover letter necessary or is it ok to simply provide them with only the documents they need? - W2s, 1099 etc.
Please advise. Your help is greatly appreciated.
Hello again Ahi Kodi. I am sorry, but this website requests that experts don't give out our private e-mail addresses. So I can't have you e-mail the letter, but the information you've provided clarifies a lot. Your tax preparer was correct in their advice.
At this point, all you need to do is send the paperwork to the address provided. Just mail copies of your Federal return, copy of your W-2, only one paystub, and the notice you received. Unless you worked different jobs during the year or were paid varying amounts from paycheck to paycheck, you only have to send in one paystub. If your vacation time was unpaid, then add a note saying that you only worked eleven months. If your paycheck varied during the year, then send all paystubs and a note that you didn't work for the one month. They just want to add up all the paystubs and check that the numbers match the W-2. So if you received the same amount each paycheck and you include a note saying that you didn't get paid for whatever month it was, then they can just multiply the numbers from a single paystub by the number of pay periods and they should get the same numbers as the W-2. So if you received different amounts, then you need to send them all the W-2s, so they can add them up. Don't worry about a cover letter, just include a copy of the letter they sent you. That will act as your cover letter.
At this time, all you have to do is mail in the paperwork and wait for them to get back to you. They're only checking paperwork for accuracy against other paperwork. You don't need to go see them yet and may never have to. Once they're done checking paper (which could take weeks), they will send you another notice. They can ask for more paperwork, say that there is a problem at which point you may need to set up a meeting with the case worker and yourself or your representative, or just tell you that everything checked out and they're dropping the whole thing. It's most likely that unless your employer messed up, that the Dept of Tax MA will send you a notice that everything checked out and they're dropping the issue.
If the MA tax guys review the documentation and continue to think that there's a problem, then I would get someone to work with you. Your tax preparers should have an Enrolled Agent that works with the IRS that is familiar with the audit process. If the audit goes any further, you should be able to pay them a lump sum to represent you at the audit. Otherwise, you may want to find a reputable CPA to represent you. Give them a Power of Attorney and you won't even have to go to the meeting.
But, that's way down the road, for now, just mail in the paperwork and hope that they'll add up the numbers and drop the whole thing. Feel free to ask for further clarification. I'll be available for a few hours. Keep your chin up. You just got lucky in a random lottery. They're not out to get you specifically, so they may just go through the motions, check the numbers, and drop the whole thing.
Reply to Jesse Hand's Post: Hi Jessie,
Thanks so much! I have a lot more visibility with my situation right now. So, to summarize things, I need to mail them a copy of my federal tax return, pay stubs, W2s and the letter itself.
About the federal tax return - My tax preparer has attached a copy of my federal tax return. I will be sending this one.
About the W2s - I have W2s for federal and state. I have lived and worked in Rhode Island from Feb 2, 2007 - March 18, 2007. I have a separate W2 for RI state as well. Do I need to send this one in too? Or just federal and MA?
About the paystubs - My breakdown for the previous year goes like this.
Nov 30, 2006 - Feb 1, 2007 => Vacation - No Pay and therefore no pay stubs.
Feb 2, 2007 - March 18, 2007 => Lived and Worked in RI. I have a W-2 for that as well.
March 19, 2007 - Dec 31, 2007 => Lived and worked in MA.
I am a contractor and get paid by the hour. So the paychecks vary in amount depending on overtime, long weekends or any days that I am sick and do not work. So, as you've suggested, I will go ahead and put in all pay stubs and include a note about being on vacation for the described time period and therefore not having pay stubs for that period. Moreover, I was on vacation outside the country and I was wondering if I need to provide proof of vacation.
Please advise, and thanks again.
Hello again, Ahi Kodi. It sounds as if you have the situation well under control now. For the first information request, I would just give them the breakdown you listed above and don't bother explaining anything other than that you were on vacation. If they request more information, then you can explain more about your vacation and provide proof if they request it. Otherwise, it's none of their business other than that you didn't work.
Did you file a tax return for Rhode Island for the time you lived and worked there? If so, I would send them a copy of the Rhode Island return also. Definitely send them a copy of the W-2 and paystubs for the work you did in Rhode Island.
If you haven't filed a return with Rhode Island, you should. Your tax preparer should have done this already. If they haven't and didn't offer to do it for you when they did your taxes after they saw the Rhode Island W-2, they were negligent and you need to demand that they prepare the Rhode Island tax return at their expense. If you didn't make enough to be required to file in Rhode Island and you decided it wasn't worth filing just to get your withholding back, then attach a note saying that to the W-2 with the Rhode Island withholding.
It sounds like you understand the situation well. Make sure to keep copies of anything you send. Let me know if you need more clarification.
Reply to Jesse Hand's Post: OK. So we have...
1) W2 (Federal, RI, MA). I also have a Bank Issued 1099 Earnings statement (Income earned on a checking deposit in 2007 and it was taken into account for tax filing). Should I send this along too? I mean, is this extra information necessary at this point?
2) Pay stubs. I will send along all that I have and mention a vacation for a month. In any case, the numbers add up fine.
3) If you are filing taxes in MA, you need to have a 1099-HC form indicating that you have had Health Insurance during your stay here. In my case, United Healthcare hadn't sent it to me, but I could still file for a return by using my Member ID# XXXXX United Healthcare's Tax ID#. So I'm guessing I'm not expected to produce a 1099-HC form for now at least (since I never recevied one to start with).
4) Copy of Federal Return.
5) Copy of Notice Letter.
Is there anything else I have forgotten? Please let me know.
Hello Ahi. It sounds like you have everything in order. I wouldn't bother sending the 1099 from your bank unless they ask for it later.
You didn't mention the issue about Rhode Island wages and withholding. Did you file in Rhode Island or were you not required to file and chose not to? If you did file send a copy of that return to the MA tax folks also. If you chose not to file, you don't need to do anything. You can still file Rhode Island if you would get anything back.
Sounds like we're getting close to a full understanding. You're doing all the right things. Let me know if you need more clarification.
I have filed for the RI tax return as well. But there has not been a refund deposit to my bank account as yet from the RI folks. Either way, I will be sending the W2 related to RI.
Don't worry about the deposit. I will click on 'Accept' before I leave work today.
Good, it sounds like you have things well in hand. Good luck and hopefully this problem will be an easy one to resolve. Let me know if you have any more problems and I'm glad I could help with this one.
7 years tax preparation. IRS Registered Tax Preparer.