The IRS Audit Blog

Archive for the ‘Tax Letters’ Category

BRIEFLY: April 2

Read about what’s happening in and around Plymouth.

Arshad at **We are Bradford** Celebrating a Multicultural Society**

Hang on to your tax data

The IRS can audit financial documents going back six years if it believes you significantly underreported income. And certain documents need to be retained longer. Dear Liz: I’ve seen some writers suggest that people can destroy financial and tax information after three years. Let me tell you my story. Before my sister died, I had to take care of her finances. She had little money left but she …

V-Ray Materials Part 2, The Refraction Layer

Question: Missed the tax deficiency petition deadline?

I received a notice from the IRS for a tax deficiency. My mom purchased some stocks under my name and sold the stocks at a loss. She reported the sale as a loss in 2006 with my income tax. I was audited again so we submitted the proper forms to them again. Soon after that I received the notice of deficiency.

I took the letter to my accountant and realized I read the deadline wrong and already missed the 90 day period to file a petition. It was due on 12/8…

What should I do now? Please help!
Correction- So I re-read the form my mom filled out and it says she sold the stocks for a profit of $400 dollars. She sold the stocks for $3500 and used the money to purchase other stocks.

She informed me this means we to not owe taxes on the sale. I don’t know if this is correct or not.

If this she is incorrect, I would be fine paying the taxes. If she’s correct, how to I fight this now that I missed the deadline?

Answer: The IRS (their computer) automatically checks all income for all people that report to the IRS. Brokerage companies report the sales price (but not the basis) of stock sales.

If the IRS does not receive a return, they prepare a “Substitute” return, they also call SFR (substitute for return) or sometimes 6020(b), (the IRS tax code that gives them authority to do so). They do so with just the sales price, but not the basis, so it is always higher than it should be.

What you need to do is submit a 1040 with Sch-D, including all your income for that year. Submit it for :SFR reconsideration.” You have a name and/or phone number, call them up and say that is what you want to do. Once you subtract out the basis for the stock, your tax should be reduced or eliminated.

Top 20 Frequently Asked Questions on Florida Short Sales and Foreclosures

A short sale and foreclosure expert compiled the top 20 frequently asked questions from buyers and sellers considering a short sale in Florida. A new website is launched to explain the process and where to turn for help. The site contains relevant news stories, live news feeds and helpful links for buyers and sellers. (PRWeb December 14, 2010) Read the full story at http://www …

Question: if my husband and i file bankruptcy, will the irs stop sending letters that we owe $5000?

It is from 2006. We go to H & R Block every year. Then next thing we know we get these letters.
It is $5000.00

Answer: No, the IRS will keep up with their collection actions.

Current tax debts cannot be cleared through bankruptcy. Only tax debts that are over 3 years old or older can be considered for discharge through BK. Further, if the debt is for a year that you have not filed a final return, the debt cannot be discharged regardless of its age. And if the debt is for a prior tax year, the return must have been filed at least 270 days prior to the BK filing before it can be included in the discharge.

If you file Chapter 13, that WILL stop collection efforts while the BK is in litigation and will stop the accrual of penalties and interest.

Of course, you need to be sure that the IRS debt is valid. I see collection letters all the time that are based upon incorrect assumptions by the IRS, usually because the taxpayer filed their returns incorrectly. The sales of stocks is a VERY common area where the IRS is wrong because the taxpayer screwed up.

Reporter’s Notebook: A tale of two Dianne Wilkersons

To her supporters and defense attorneys, former state Sen. Dianne Wilkerson was a voice for some of the state’s neediest and least powerful people, as well as a “flawed being, who made terrible mistakes.” According to federal prosecutors, the Roxbury Democrat was a politician who acted as if she was above the law, learned nothing from her past conviction, and broke laws from the outset of her …

IRS Letters and Notices

Question: Do Businesses Required Churches to Have IRS Determination Letter before they will donate?

I understand Churches are not required to apply for exemption because they are automatically exempt under IRS code. However, in the real world of business, I would like to know if donors such as other nonprofit, and for-profit businesses require “CHURCHES” to provide an “IRS TAX DETERMINATION LETTER” before they donate though other nonprofits are required to by businesses.

Answer: In my real world experience, churches generally do not apply to the IRS for a determination letter proving they are exempt from income taxes because (as you noted) they are not required to do so. Thus, potential donors don’t ask churches for a copy of their IRS letter, since most churches don’t ever get such a letter.

Churches often will apply for a state certificate proving they are exempt from sales taxes, since that helps in purchasing everything from paper clips to pipe organs. If you own a business that is considering contributing to a church, you might ask to see their sales tax exemption certificate as a second-hand way of checking their nonprofit status.

Slidell Housing Authority board fired after mayor gets letter from HUD

Director’s perks prompt inquiries

Junior League of Austin