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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10163
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Fell behind on taxes for 4 years. To catch up, I am in month

Customer Question

Fell behind on taxes for 4 years. To catch up, I am in month 23 of a 72 month installment agreement with the IRS.I started owing around $45K-- now down to around $36K.I pay $580.00/ month.On Sept 26,2016, I received a CP 2000 notice - stating I owe me around $700 on my 2014 return; the basis of which was that I had failed to report some income on my 2014 return, for forgiveness of debt from a credit card company- making the tax owed $700. Payment is due Oct 26, 2016.I can pay the amount claimed owed by IRS for 2014 ($700) -- I would almost just think it is easier to just pay it to keep my installment agreement in good standing due to
less time and hassle than responding with detailed letter response, contacting and paying tax pro, etc. and. But the forms from the IRS say that should check the box stating "I agree with the amount" ; however, but I am concerned that by stating I agree with the amount, I will have my 2013 return audited/ assessed etc., where I did have much more debt write off -- $42,000 an claimed insolvency per the tax form-- but if I admit the amount owed on my 2014 return, am I setting myself up for a much bigger possible deficiency in 2013? In 2103 I did report all forgiven amounts and attach proper forms showing insolvency making debt written off non taxable. Not sure if I would still be insolvent in 2014?I called the IRS Friday 10/21/16 to request more time-- they said in the Sept 26,2016 letter that if I did not pay by Oct 26,2016, the would send me the Notice of Statutory Deficiency(???) -- and I am afraid that may cancel my installment agreement. When I called, I got to a voice message from IRS saying I could apply for extension( did not actually speak with IRS rep) - but had to write a letter. I overnight-ed a letter to the IRS requesting thirty (30) day extension. Per the phone message instructions (also faxed copy to IRS fax #) Hard copy of my letter requesting 30 day extension to IRS is supposed to arrive today Oct 24,206,( two days BEFORE the tax due on Wed Oct 26,2016), but I am afraid the Notice of Deficiency has already been mailed so I get it Oct 26,2016.My biggest goal is not to jeopardize the Installment Agreement.1. Will I automatically get the 30 day requested extension?2. Should I just pay the $700 and say I "agree " with amount owed ? Could I just pay the $700 and possibly later amend my 2014 return - I realize I would not get a refund due to the installment agreement, but at least I might get a credit against what I owe.3. Will payment subject me to greater audit -- the 2013 return?
Submitted: 1 month ago.
Category: Tax
Expert:  Lane replied 1 month ago.

Hi My name's Lane

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Yes, you will get the extention. They only offer this when they intend to accept the request.

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I would the simply work through the worksheet to see where you were in 2014, before deciding what to do.

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It would be reasonable for you to be insolvent, given the surrounding facts and circumstances

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Finally, I cannot speculate on an audit of 2013 .. but you're getting to the place where they will typically not audit (3 years) AND if you've reported accurately... an audit is not necessarily a bad thing .... MANY audits end with a no change letter

Expert:  Lane replied 1 month ago.

Paying the 700 is, of course, the simpler route. AND, depending on your comment about going to a tax pro, may actually be the least expensive overall path.

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Please let me know if you have any questions at all, before rating me.

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, a Master’s Degree, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Customer: replied 1 month ago.
I would like to just take sometime and, as you suggest, just do the solvency evaluation-- based upon that, maybe I will just pay what is claimed owed by IRS. That will take a bit of time to get together everything and I do not think I can get that done by today/tomorrow.But, I do not want(1) my Installment agreement affected or (2) have a Notice of Deficiency assessed which I am told may jeopardize my Installment Agreement
Expert:  Lane replied 1 month ago.

I understand. You CAN always go back and amend. So maybe the SAFEST thing to do is go online and make a the $700 payment.

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Once you specify that the payment is for 2014 (everything in the IRS system is linked to a tax year) you will have hedged. The system will apply that TO 2014 automatically.

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https://www.irs.gov/payments

Customer: replied 1 month ago.
I have never made an "on line " payment to the IRS - How do I do that?
Expert:  Lane replied 1 month ago.

This link I provided, above

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Let me put that here again (there are several options; credit/debit card and "direct pay," an electronic check method, are the two big buttons you'll see on the page). Either will let you tell the system what year to apply the payment.

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https://www.irs.gov/payments

Customer: replied 1 month ago.
Damn it!! I sent the payment on line- for Tax Year 2013 - should have been for 2014 -- I there anything I can doto cancel 2013 payment and apply it to 2014 !!
Expert:  Lane replied 1 month ago.

Oh no! ... You could always try to stop on your end (stop payment, if you did the electronic check) or call you card customer service and ask them to stop, cancel, or refund the charge ... (takes a few days some times) but then once you have a commitment from then that it will be reversed, you can go online and make it for the right year.

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ALSO, if you call or go into a local field office, (if you CAN'T get it stopped), they will be able to see the amount and apply to the right year

Expert:  Lane replied 1 month ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

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But again, let me know if you need more on this.

Lane

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