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For someone who hasnt answered me before: Can someone

For someone who hasn't answered...
For someone who hasn't answered me before:

Can someone fix a 2005 tax return that accidentally double reported stock gains and have the IRS adjust the supposed amount of back taxes owed - since they are not really owed - they were just double reported by accident. The taxpayer hired a firm to take care of this and only recently discovered that they failed to correct this issue.

A notice of lien has been acquired by the IRS and the taxpayer is quite desperate to correct the issue and to settle the lien.

What should she do?
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Answered in 16 minutes by:
9/1/2012
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,265
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Once the lien notice has been received. (The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.)...

You should appeal many IRS collection actions to the IRS Office of Appeals (Appeals). The Office of Appeals is separate from and independent of the IRS Collection office that initiated the collection action.

They ensure and protect their independence by adhering to a strict policy of no ex parte communication with the IRS Collection office about the accuracy of the facts or the merits of your case without providing you an opportunity to participate at that meeting.

Revenue Procedure 2000-43 has more information about Appeals’ mandatory independence and ex parte communication and is available at www.IRS.gov.
The two main procedures are Collection Due Process and Collection Appeals Program.

For the following, use the CDP (Collection Due Process:

• Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320
• Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing
• Notice of Jeopardy Levy and Right of Appeal
• Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing
• Notice of Levy and Notice of Right to a Hearing with respect to a Disqualified Employment Tax Levy


The CAP, (Collection Appeals Process) is available for these things:

• Before or after the IRS files a Notice of Federal Tax Lien
• Before or after the IRS levies or seizes your property
• Termination, or proposed termination, of an installment agreement
• Rejection of an installment agreement

CAP is usually quicker but, you can't and would probably be easiest, for this fairly routing matter. BUT you can't go to court if you disagree with the CAP decision.

The taxpayer can represent themselves at either hearing. Also, A Low Income Tax Clinic (LITC) may represent them if they qualify.

If the taxpayer wants you to contact or appear for them and to receive and inspect confidential material, they have to file a properly completed Form 2848, Power of Attorney and Declaration of Representative.

They can also authorize an individual to receive or inspect confidential material but not represent them before the IRS, by filing a Form 8821, Tax Information Authorization. These forms are available at your local IRS office, by calling 1-800-829-3676.

To request a hearing or equivalent appeal with the appeals office file form 12153.

To request an equivalent hearing, you must check the Equivalent Hearing box on line 6 of Form 12153, or if you don’t use Form 12513 write that you want an equivalent hearing if the CDP hearing request is late.

If you received both a lien and a levy notice, you may appeal both actions by checking the boxes on line 5 of Form 12153 or if you don’t use Form 12153, you may appeal both actions in one written request.

Be sure to remember to tell them or your reasons for disagreeing with, the lien filing or the levy action.

...hope this helps!

If you have further questions, be sure to come back here.


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One last thing ...

if you aren't getting help through normal channels or believe an IRS system or procedure is not working, as it should, you may be eligible for Taxpayer Advocate Service (TAS) assistance.

You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TTD 1-800-829-4059. BUT, TAS cannot extend the time you have to request a CDP, equivalent or CAP hearing.



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Customer reply replied 5 years ago

Thanks for all of that, but you missed my most important question - please answer:


 



Can someone fix a 2005 tax return that accidentally double reported stock gains and have the IRS adjust the supposed amount of back taxes owed - since they are not really owed - they were just double reported by accident. The taxpayer hired a firm to take care of this and only recently discovered that they failed to correct this issue.


 


(I'm getting different answers from different representatives on JustAnswer about this question)

You're asking the wrong question (if the facts are as you reported them).

 

 

Sorry to put it that way, but what has to happen now is in the answer above ...

 

 

showing proof to the IRS that the gains were doubly reported.

 

 

Preparing a 1040 from 2005 will not help now.

 

 

The IRS will make the adjustments, one this person goes through the appeal process to show proof that the sales were reported twice.

 

 

Now, if the return was never filed, then it would need to be prepared and filed.

 

 

Typically the problem with capital gains is that the taxpayer is responsible for reporting the basis, and when the IRS gets the 1099, if the taxpayer did no schedule D the IRS assumes that the sale was all gain.

 

 

So, it really seems strange that the IRS didn't already send out the CP 2000 where THEY make the change to match the 1099 that came from the Broker/Dealer. .... which, again, if the taxpayer never filed, or did not report the basis of the stocks, would still leave the tax bill too high.

 

All that is to say ... if things are as you reported above, then the taxpayer need to take those actions ... preparing another firm is not what the IRS is looking for. They're looking for documentation. The brokerage statement from 2005 would be the place to start.

 

If the form was never filed, and the IRS is asking for payment on the proceeds of sale as if they were all gain, then preparing the return for 2005 would rectify the problem of never filing, but since the process is this far along, starting the appeals process is probably the best way to "stop the locomotive."

 

Let me know ...

 

 

 

 

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Customer reply replied 5 years ago

Ugh, this is all too confusing for me.


 


All I want to know is CAN the filing (it was filed) be amended or fixed at this point and does the IRS HAVE TO acknowledge it was a mistake (esp. since this person was on psychological disability in 06-09) and then adjust the SUPPOSED taxes owed?


 


I obviously don't understand any of this. And the person in question is currently not gainfully employed, technically disabled and does not have the money or ability to hire someone to help him or to travel to hearings with the IRS. He is also worried that they will slam him and not give the guy a chance to clear up all his back taxes messes and file his returns that weren't file or filed incorrectly.


 


Thanks

My point is simply that, once the IRS has sent a lien notice, simply re-preparing the tax forms won't do any good.

If you got it right and then just sent it in (after a notice of lien has already been sent) you may not even get a response.

If you complete the 12153 it will stop the collections and you then have a chance to tell them what happened.

Here's a link to the form:

http://www.irs.gov/pub/irs-pdf/f12153.pdf


If this person can't afford help then they should contact a LITC (Low Income Taxpayer Clinic).

Maybe that would be a good place to start, especially if, as you now say, there are multiple issues and you need to work through several things with someone (and does not have the money to hire a professional).

Here's a link to a the clinics and their phone numbers in California.

http://www.irs.gov/uac/Contact-a-Low-Income-Taxpayer-Clinic-(LITC)-in-California

I wish you the best of luck.





Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,265
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Customer reply replied 5 years ago

Thank you - that's what I was looking for.

Hi Phil,

Just checking in.

I hope everything goes well.

Lane
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Lane
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