What can we do if IRS assess incorrect tax due, and not reachable?
My client is a retiree subject to 0% of capital gain tax rate. This is plain and simple. I filed an amendment to his 2019 tax return for the purpose of correcting another paid tax preparer's error by adding a missing state tax form, and added a missing stock wash sale, which further reduced his taxable income. At the time of filing amendment, his original tax liability is zero.
After the amendment was filed with tax liability of zero, the taxpayer received IRS collection letter, saying due to the amendment, he now owe $2,595.92 income taxes. He assigned me as his POA. We were not able to put the collection on hold as IRS does not pick up the Practitioner Priority call at all. I sent certified mail with all evidence and Form 843. However, the collection letters keep coming with escalated language, saying we have not responded to the IRS notices. Today we just received CP504 stating notice of intent to seize property. I am filling out the Form 9423 Collection Appeal Request now. But what is the use if IRS does not pick up calls and open their mails?
My other client filed Form 9465 and Form 433-F for installment payment agreement of the $74K tax liability (this amount owed is above the threshold to electronically arrange install payment on the IRS website, and attaching the PDF to E-File is the only option). The signed PDF form was attached to his Form 1040 and E-Filed to the IRS. Without receiving any disapprove notice of the install agreement request, my client received collection letter CP 23 charging penalty for fail-to-pay and demand payment of full amount. Again, we cannot reach IRS or taxpayer advocate by phone calls, and now I am filling out Form 843 for certified mail, knowing the collection will keep coming.
Can the IRS really pull money that taxpayers do not legally owe out of checking account as the letters threatens to do?
When IRS is completely out of reach, irresponsive, not able to communicate with, and even fail to even open attachments, what else is left for us to do? Any experience to share?
This article from AICPA further made any hope to deal with the IRS appears dim (I strongly agree that IRS should stop all collection activities until their catch up with their basic operational functions, but what can we do if they don't stop?).
It appears that the IRS's automated collection process has some serious accuracy issues, as so far, 100% of the collection letters brought to me was simply inaccurate.
"attaching the PDF to E-File is the only option"
Another option is an envelope addressed to IRS, with a stamp on it.
The 504 notice isn't the trigger in most cases for requesting a Collection Due Process hearing. That's the Form 12153. If you file one now, IRS will probably tell you it's premature, but it will probably freeze the account. File it again if you get the notice that says your 30-day deadline has started.
This is the second post today that describes an amended return filed when the original was not prepared by the same practitioner. Maybe IRS is considering it a second return and adding the income amounts together? I don't really understand the aversion to paper filing of amended returns, which would make such confusion less likely, especially when no refund is involved.
I attended an IRS tax forum today, and they said the IRS is still behind with letters. We were told if we responded to a notice, we should not respond to a 2nd notice for the same thing. Just have patience, and wait for them to catch up