Weird IRS problem - am I domed?
 

I got a letter from IRS saying I failed to pay taxes on royalties for TY 2022. Now there is interest and penalty besides. It's not a scam, however it is a screw up. I'm not entitled to any royalties and never received any. It is absurd. I wrote to the IRS saying it is impossible. The IRS replied with the firm that supposedly paid me and said I need to work this out with them and that interest continues to accrue. I contacted the firm at their web site. They do not reply. Why? Probably, it's that they have no idea who I am. I have no idea who they are. I wrote to IRS and said they should contact the firm to fix their error. Do I really need to pay a lawyer to prove my innocence? In Chinese courts you have to prove your innocence. Is this what it's come to?

I've had two life insurance policies recently rescinded I think due to mistaken identity. I wrote two women with the same name in the same zip code in the same week. Another has a pretty common name and into a billing dispute with her doctor because of an unpaid bill by a woman with the same name AND same birthday. This stuff is a problem. But EIN and/or SS #s should get it straight.

Surely thy have to prove you received the income.

I'm not a lawyer, but I guess this would come out in court. I don't even want to think of trying to recoup costs for this.

To answer the question posed by your last 2 sentences...when it comes to the IRS, yes.

My experience of dealing wit an IRS error is an exercise in time wasting and patience, and expense on your part.

You will likely have to spend a day of your time, and call them, spend a few hours on hold, and finally talk to a human. They will be almost as useful and helpful as talking to your dog. Ask them to set up an appointment for you to drive to the nearest SS brick and mortar office to go see a IRS employee face to face, and show evidence of your case.

Take a patience pill, as you will sit in an outer office for a while, and you will finally go back and talk to a human. In my case the first person took all the information and could not fix the computer error, and she called over the one and only employee that understood the problem, and likely showed the first employee for the 100th time, how to resolve the issue.

My issue was they did not show on entire of earnings. I had sent them my W9, and a copy of my filed tax returns. That went on for 4 years. They just could not fix the problem until I sew them face to face. It was an exercise in futility to find the one employee that actually was smart enough to fix the problem with their records. She typed on the computer for literally seconds, and wham my records were correct. Several years of effort corrected in seconds.

If only I could produce the cancelled royalty check that never existed or deposit never made.

Show them the statements that show no payments when they say you did receive them.

You can do this, trust me: The Chunky Lady only sings when you let her...

I have lived this dream and the way out, if you are sure you are in the right, is to ask for an audit for the TY in question.

They hate that.

I do all my household and LLC finances, taxes, etc., have since my first pay check: If you are sure you are right, I am betting you are, make their accusations their problem.

The only thing a bureaucrat hates more than work is being held accountable. The IRS is not staffed by the best and brightest, BTW. I have been audited twice and owned both of the Auditors like a roped goat.

How much they talkin’ you owe?

Under $1,000 pay up and shut up. You’ll live longer.

Over $1,000 pay up and shut up. You’ll live.

A couple years ago IRS had a problem with my long term capital loss. I called them-nada. My lawyer wrote them-also nada.

I paid up, shut up and stopped claiming the loss which you have to amortize but only up to $3K per year.

I will never have a capital loss again, ever. This is what they want so this is what they get.

Bastiges.

Thanks Seahawk. Double down...I like that. By the way, The original IRS letter claimed I didn't pay taxes for W2 income for TY 2022. Problem is, I retired in 2021. I reviewed my returns and uploaded docs to their portal. That issue seems to have evaporated. These guys are out of control!

$13k. That is serious money.

Out of curiosity (I'm being nosy now), what does the company who supposedly paid you royalties do?

Horne LLP. Marketing and data analytics. Mississipi, of all places. Nothing related to what I used to do, which was banging out code in a cubicle farm for an enviro lab. Rarely saw light of day let alone a MS day. Only did internal stuff, except for one job where you could check out beach water quality:

https://www.beachreportcard.org/33.91029999999999/-118.51929100000001/11

Definitely worth the fight, then.

I owed substantially less so they blew me off knowing my ROI was unjustifiable.

http://forums.pelicanparts.com/uploa...1737321712.jpg

I don't have a ton of experience with the IRS, but IME, this will get worked out correctly. It may be a PITA, but I think it'll eventually be fine.

$1000 is not chump change, especially if it's totally bogus.

I've had the best luck just calling the IRS and talking to an agent or a supervisor...whoever gets on the phone. I know other people who have had the exact same experience and I live in a world of people who get paid as independent contractors from a myriad of sources, sometimes large amounts. Some of the people I know were even remiss in paying their taxes when they were young, so it wasn't even the IRS's mistake they were dealing with.

Everyone, to a person, has had good luck resolving problems by just calling the IRS directly. Screw all of those services and scams that claim to help you with your back taxes...just call the IRS. I've even had luck getting someone from the CA. Franchise Tax Board to help me with a dispute and they make the IRS look like a charity organization. :cool:

I should add, it goes without saying that every phone conversation should be followed up immediately with an email between you and the person you spoke with confirming whatever you discussed. Need to keep records.

Thank you!

That's one direction I didn't take. I wonder if it would have worked.


Don't give up, BRP914.

When I had a big ($44,000) problems with the IRS I wrote to them repeatedly and got the same "Thank you for your inquiry, we will respond in 30 to 90 days" letter over an over. I got it whittled down to $37000 within a year, but the rest was gathering penalties and interest. My accountant said pay it and try to dispute it. I paid it and started the dispute. I worked on it for a year, but just kept getting the "back to you in 30 to 90 days" response. Then I contacted a lawyer to help me. He was completely useless. He charged me $500 and told me I owed it and had to pay it. I started working on it myself, sent them a sheaf of records - easily an inch thick. We went back and forth for months. They finally agreed that I didn't owe the money.

http://forums.pelicanparts.com/uploa...1737375888.jpg

That wasn't the end of the story. I waited and waited, but they never sent my money back. I never had any luck trying to talk to them on the phone, and contacting them by mail only resulted in the usual "back to you in 30 to 90 days" reply. I finally wrote to my senators and my congressman and asked for help.
Senator Rob Portman ignored me.
Senator Sherrod Brown's office called me the next week saying if I didn't get a check from the IRS in 5 to 10 business days to call them back. I got the check the next week.
My congressman Warren Davidson wrote to me the week after I got the money to tell me he was working on it. This guy is a joke for a congressman. He voted against giving the IRS enough money to update their system and hire enough staff to actually reply to taxpayers, but he is too lazy, stupid, or disinterested to help us himself.

The upside is they paid me 5% interest on the money for the year and a half they had it (at a time when bank CDs were paying 2.5%) and I sent copies of their reply and the check to that useless lawyer and he gave me my money back.

When we opened our little aerial photo business, the first year was spend spend spend to acquire the aerial camera, multiple computers and lots of expensive software. Aircraft rental was expensive.

We did not make any profit that year at all. The next year, we made a small profit, and we were audited. Ack! I hadd a CPA buddy that I had to pay, and he had me print out every single receipt for everything we bought for the first year, and do it twice, one for the auditor, and one for him. I had to buy a printer-copier-fax-copier, and lots of faxing and two reams of paper and two weeks of my time. My CPA had a office space for her to do her work for a few hours.

In the end, yep I had made a novice error, and we owed $38. The auditor said it would cost them more to open the case to accept the money, so she said thank you and goodby. Phew. I have no idea what it cost me to show them we were doing our best. I keep very accurate records in QuickBooks, and hand the file to the CPA for him to make sure I did not put anything in the wrong category, and print reports and file the returns.

First go to IRS.GOV and set up your online account. This will give you access to several years transcripts. Then you go into the year in question and look for the 1099 they are saying you failed to report.

This is interesting. If a royalty payment results in a 1099 then I suppose the firm made a typo with the SS#, which is how I got snagged. Someone out there received a 1099 with their name but my SS#. What did they then do? Did they pay tax or WooHoo->circular file.

The company who paid you had to submit a 1099 because the payment was over 10K.
Challenge the IRS to show that documentation

There are several types of transcript available. Account, tax return and wage/income. The latter will show what w2, 1099, etc income was reported to IRS. If there is a 1099 for income you NEVER received you need to get that squared up with the payer. IRS just matches reported income with your tax return and bills if there is a difference. Arguing with IRS on this is like arguing with a soda machine that gave you orange instead of grape. You gotta go to the guy who filled the machine as the machine don't care.


https://www.irs.gov/newsroom/what-to-do-when-a-w-2-or-form-1099-is-missing-or-incorrect

Yes and yes.
With the IRS, the burden of proof is on you.
if it were me in that situation,
I'd just bite the bullet and get a tax lawyer to make it go away.

you don't need a lawyer to get a 1099 corrected. read the link i provided.

The plot thickens, big time. Scammer used my ID to apply for COVID rent relief. I filed ID theft affidavit with IRS. IRS says covid fraud is so pervasive that it could take 15 months to investigate my claim.