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Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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I was 14 years behind in filing returns, which I originally

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I was 14 years behind in filing returns, which I originally believed would be refunds in each year. I filed all returns last fall.

In 1997 and 1998, I ended up owing money. ($9156 and $6664, respectively)

I had a levy for $16,624 in 2003 which "was applied toward 1999" (which I now believe when filing was $5199).

My question is about the use of the levy money. Can the levy money be used to wipe out the 1997 and 1998 tax debts?

Lane Killen
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Customer: replied 5 years ago.

Yes ma'am. Can I provide more information?



The statute of limitations on a tax debt collection is usually 10 years, but the IRS has ways of extending the SOL. If you did not file returns for 14 years, more than likely the IRS prepared the returns for you. (When a return is not filed by a taxpayer, after a certain period of time, the IRS prepares it for you). If the tax return was prepared by the IRS under the authority of section 6020(b) of the Tax Code, the statute of limitations does not apply. You can refer to section 6501(b)3 of the Tax Code and section(NNN) NNN-NNNNb)-1(c). Based on this information, if the remaining monies from the levy is enough, it can be applied towards, or used to wipe out your 1997/98 tax debts. Please note that penalties and interest continues to accrue on any unpaid balance.


Customer: replied 5 years ago.



That makes sense to me.


Do you think that the monies levied in 2003 would then stop all of the interest (and maybe penalties) in the previous years? So should I worry about the penalties and interest from 97/98?


Also the calculation of 97 / 98 was in January 2011. They just found the levy in March 2011.


Should I file an amended return? Or go see an agent?



Please note that penalties and interest continue to accrue on unpaid balances. The best way to find out how what the levied amount was applied to is to call them. I cannot answer that question for you. Note that if the IRS did prepare the returns for you, which more than likely they did, usually filing the back returns will reduce your tax liability. You may not owe as much as they say you do. I've seen this happen many times. If no returns have been filed, you would be filing original returns...not amended ones. I hope this clarifies matters for you.
Customer: replied 5 years ago.

Yes Ma'am,


I agree with your logic. But I filed all the returns last fall. And the calculation they did was in January 2011 (what I owed).


Then they found the levy money after I asked them to look in March (2011). I don't think they have used the levy money in their calculations at all...


I guess I just don't understand how the levy money they got in 2003 would be retroactively paid.


How should I ask the agent the question?


Please advise.



My apologies,... you did write that you filed the returns last fall. Since you've already filed, there is no need to file amendments, unless you left out some deductions. If they haven't applied the levied money to your tax account, it can still be applied. They cannot just hold your money and not do anything with it. My suggestion is to request a meeting with an agent and go over your tax account. In the meantime, you can request your tax account transcripts and look over them prior to meeting with the agent. You can request your tax account transcripts online on the IRS website.
Customer: replied 5 years ago.

Okay. I will request a meeting and ask for the transcripts.


You've been great.


Last time I faxed questions to them, they misunderstood and wanted to put me on installments starting on 6 August 11.


I have to call them to stop the installment issue anyway.


Is there a best office to call in my case?


Please advise.




The next time that you communicate with them, let them know that you want to discuss your tax account. Also let them know that money was levied from you and you don't think that it has been applied to your account. They cannot deny you a meeting. As I don't know what state you're in, you can call 1-800-829-1040 and ask them for the location that you should call.
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3452
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and other Tax Specialists are ready to help you
The 2003 levy cannot be applied to other years even if the amounts levied excess of the amount due on your return. The statute of limitations for claiming a refund is 3 years from the filing deadline or 2 years from any payment. A payment/levy in 2003 is past both of these. Even if you filed a return that would now show an over payment of that year, the excess or refund will not be moved to any other year. The money is basically lost.
And. Collections number is 800 829 7650.
The following is a excerpt.
When a refund has expired, that refund money disappears forever. In IRS terminology, an expired refund is considered an "excess collection". That refund money cannot be sent to the taxpayer as a check. Nor can the refund money be applied as a payment towards another tax year for which a person might still owe the government. Nor can be refund be applied to another year as an estimated payment.