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Lev
Lev, Tax Advisor
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I SS8 determination in my favor in September, 2012 on four

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I SS8 determination in my favor in September, 2012 on four years' tax returns, 2007 - 2010. I discovered the ss8 process in October, 2010. I filed amended returns in a timely manner within three years with the proper "protective" wording. I filed 2007 and 2008 on April 14, 2011. 2007 was already past the statute of limitations, but 2008 was not. The IRS lost my 2008 return and have denied the claim based on the statute of limitations. All I have to show for it is a delivery confirmation. 1. What are my chances in an Appeal? My 2009 return was also filed in a timely manner, but with only the wording "protective amended return" on the return. Will I have problems with that?

Is there any tax law that can help me extend the statute of limitations? Is there any latitude or other claims that I can make? Procedures on filing a protective return seem pretty clear to me. But the IRS truly lost my 2008 return. In one of the many conversations I've had with them I was told a myriad of conflicting information including 1) the date of the determination (which took almost two years, by the way) should restart the clock (I believe that's incorrect), 2) I was asked to refile the 2008 return, 3) they have confirmed that they have the 2009 and 2010 returns.

If there is no recourse, I am out $20,000 in taxes that I shouldn't have paid.

In a related note, the IRS adjusted my 2008 return in September, 2009, crediting a $3,000 overpayment which they applied to 2009. But in that adjustment, they assessed $500 in penalties for failing to file a timely quarterly return. The SS8 determination affirms that I was not required to file ANY quarterly returns. Do I have recourse at this late date to recover those fees?

Thanks in advance.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
1. What are my chances in an Appeal?
Your return is considered filed timely if the envelope is properly addressed and postmarked no later than teh deadline. You are expected to provide a proof. If you will not provide any proof - your chances to appeal are minimal.

LEV :

Will I have problems with that?
The fact of wording will have no difference.
Generally, a protective claim is a formal claim or amended return for credit or refund normally based on current litigation or expected changes in tax law or other legislation. You file a protective claim when your right to a refund is contingent on future events and may not be determinable until after the statute of limitations expires. A valid protective claim does not have to list a particular dollar amount or demand an immediate refund. However, a valid protective claim must:Be in writing and signed,


Include your name, address, SSN or ITIN, and other contact information,


Identify and describe the contingencies affecting the claim,


Clearly alert the IRS to the essential nature of the claim, and


Identify the specific year(s) for which a refund is sought.


Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File.


Generally, the IRS will delay action on the protective claim until the contingency is resolved.

LEV :

Is there any tax law that can help me extend the statute of limitations?
Yes - please review details here and verify if any may be used in your situation - http://www.irs.gov/irm/part25/irm_25-006-001r-cont03.html

Customer: replied 1 year ago.
I'm sorry, but I already knew that. I have asked three related questions here. I do have evidence that I mailed it - a delivery confirmation.

I'm looking for a more in-depth analysis of the situation, could you please pass this question back into the forum?

I'd like to hear from a seasoned tax attorney.

Thanks...
Customer: replied 1 year ago.
1. This is from the government website:

On the Form 1040X you file, do not complete lines 1 through
22 on the form. Write “Protective Claim” at the top of the form,
sign and date it. In addition, enter the following statement in
Part III: “Filed Form SS-8 with the Internal Revenue Service
Office in (Holtsville, NY; Newport, VT; or Washington, DC; as
appropriate). By filing this protective claim, I reserve the right to
file a claim for any refund that may be due after a determination
of my employment tax status has been completed.”

My 2009 return does not have that paragraph, it simply says "protective amended return" at the top. Does this change your opinion?

2. My only evidence of the 2008 filing is a Delivery Confirmation. It went in the same envelope that my 2007 amended return went in. They have the 2007, which truly was past the statute of limitations. How likely is Appeals to believe that I sent it? I know that takes a crystal ball.

3. I know that in normal litigation "discovery" starts the clock. Not so with the IRS.

4. In November, 2009, the IRS amended my 2008 return, crediting $3000 to 2009.

Does either 3 or 4 have any bearing whatsoever?

Expert:  Lev replied 1 year ago.

1.
Please see IRS publication 556 - www.irs.gov/pub/irs-pdf/p556.pdf - Protective claim for refund. If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. A protective claim can be either a formal claim or an amended return for credit or refund. Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. A protective claim preserves your right to claim a refund when the contingency is resolved. A protective claim does not have to state a particular dollar amount or demand an immediate refund. However, to be valid, a protective claim must:
Be in writing and be signed,
--Include your name, address, social security number or individual taxpayer identification number, and other contact information,
--Identify and describe the contingencies affecting the claim,
--Clearly alert the IRS to the essential nature of the claim, and

--Identify the specific year(s) for which a refund is sought.
In additional - here is a special Rev. Proc. 2011-48 - http://www.irs.gov/irb/2011-42_IRB/ar13.html - see 04 Manner of filing a section 2053 protective claim for refund.
In your case - seems as all requirements met if you "identify and describe the contingencies affecting the claim" - that might be done as an attached note.
See "Identification of the claim or expense" in the Rev. Proc. 2011-48 that we referenced above.
2.
Based on your information - it would be very hard to proof your timely filing.
See in the same Rev. Proc. 2011-48
2) Contacting the Service when no communication received. Although a timely-filed section 2053 protective claim for refund will be timely filed even if the Service does not acknowledge its receipt and/or process the protective claim, the fiduciary or other person filing the form on behalf of the estate promptly should contact the Service at(NNN) NNN-NNNN(or other appropriate number) to inquire into the Service's receipt and processing of that protective claim for refund if the estate does not receive from the Service the written acknowledgment of receipt described in section 4.06(1) of this revenue procedure within 180 days of filing a section 2053 protective claim for refund on a Schedule PC attached to the Form 706, or within 60 days of filing a section 2053 protective claim for refund on a Form 843. A certified mail receipt or other evidence of delivery to the Service is NOT SUFFICIENT to ensure and confirm the Service's receipt and processing of the protective claim for purposes of this revenue procedure.

So far - your chances to convince the IRS with Delivery Confirmation are none and your chances to defend your position in the Tax Court are minimal.

 

You still may want to discuss the issue with the tax attorney as you originally stated.

Sorry if you expected differently.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22961
Experience: Taxes, Immigration, Labor Relations
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Taxes, Immigration, Labor Relations