November 1, 2009

Mistakes The IRS Commit

Almost each tax advisor who's worked for a few years will tell their own horror story when it comes to the IRS committing a mistake with somebody's taxes or tax record. As a matter of fact, literally thousands of dollars are involved in numerous IRS errors. The total amounts are quite significant when added up. The IRS assessed almost 11.6 million penalties in the year 1986. The total amount equated to $2.5 billion. Final figures show that nearly $890 million of the penalties where subsequently dismissed or dropped. That amounts to thirty-six percent of the total amount that was billed to American taxpayers. David R. Burton, United States Chamber of Commerce in Washington's manager of tax policy gathered these figures.

The sending of notices to taxpayers in relation to underpaid taxes or late filing to taxpayers is another error committed by the IRS about 15-20% of the time. This shows that millions of people have to fight the IRS for causes that are unjustified. If you receive an IRS notice and are aware that they're committing a mistake, what do you do?

"The first rule in replying to an IRS notice is not to assume that they are correct", according to a tax manager from New York, Jo Carole Klepack. Taxpayers can call the phone number printed on all IRS notices, regardless if the mistake is right or incorrect. But "we found that accomplished very little because when you call, you speak with a clerk who isn't familiar with the case", says Israeloff, Trattner, & Company's Robert Israeloff.

Most IRS problems are resolved via the mail, so writing a letter is the best option. Make sure that you only send copies of your legal documents. So you can verify that the IRS received the mail, use a proper courier service or certified mail. Before your problem is resolved, you'll probably get more computer-generated notices.

But you will benefit from visiting an IRS office or seeking tax advice from a professional if the error includes a substantial amount of money. Dealing with an IRS agent face to face is much better than simply waiting for your letter to be read among a bunch of thousands of pieces of paper.

Most people believe that their tax records will be further examined if they visit an IRS office. This is incorrect. You will be bringing the error to their attention, and you may be able to cease the proceedings sooner. It's a faster way to get them to cease any effort at enforcement.

However, there are some rare and lucky taxpayers who actually benefit from the errors that the IRS commits. A simple but uncommon instance is when taxpayers essentially get a bigger tax refund than they're actually entitled to get. However, these may only lead to IRS problems later, so it's recommended not to cash these checks. Whenever dealing with the IRS, the best advise to bear in mind is that you should be patient when trying to clear up an IRS issue.

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