Five Hundred and Sixty-Six Days



Written by: Ame Galloway, EA

It started off as any normal CP75 starts off. A simple notice asking for proof of Filing Status, Dependents and Earned Income Credit. These types of IRS notices are never easy to handle, and I didn’t expect it be. But I wouldn’t have guessed it would take five hundred and sixty-six days to resolve it.

The first thing I had to do was prove that there was a qualifying relationship between the member and the dependents she’d claimed. Because the member was the aunt and not the mother, obtaining the birth certificates for everyone concerned proved to be quite a task. She had to order new birth certificates from PA, and three months went by as we waited for them to arrive. The relationship was established, though, piece of cake.

Next we were on to residency. The school for two of the children provided a letter showing that they had lived in the home for five months of 2013. The address listed in the letter matched the address on the Department of Social Services Income Support Application for the beginning of that same year, which further supported the claim.

Rent receipts and utility bills were submitted, but the money order receipts were not accepted because the IRS said anyone could have purchased them. Head of Household was denied and we conceded because it did not change the bottom line owed by the member.

We sent the information regarding the income of other adults residing in the home and proved that the taxpayer had both lived in the home and had the highest AGI in the household. But the IRS still was not satisfied. The examiner’s response letter said, “To qualify as a dependent you must verify that you provided for the majority of that person’s support and that the person lived with you for over six months.”

Meanwhile, so much time had lapsed that the Notice of Deficiency was issued and the case was transferred to another unit. The taxpayer was able to obtain additional medical records for the children, which we submitted to the IRS along with another detailed explanation of why the children qualified as dependents of the member.

Then months went by with no word from the IRS. As I was not sure if the medical records would suffice, I continued to ask the member for a copy of the lease agreement that she had not yet submitted to me.

Unfortunately, the audit process had taken so long the member was unable to continue to pay the rent. The $8K refund from the prior year’s taxes that she had been expecting had not materialized, and we learned that her current year refund had been taken by the IRS to cover the tax deficiency from the audit. The member’s sisters were unable to make ends meet, and without this money for the household they were forced into shelters with the children. The member tried her hardest to keep everyone together and had even stopped going to school so that she could work more hours. She put her possessions into storage and moved into a hotel. I continued to press her for the lease agreement and another two months went by without the document.

I submitted a form to the Taxpayer Advocate Service explaining the member’s hardship and asking for assistance. Weeks went by before I finally received a response letter, and then I finally received the lease agreement from the member – by this point it was 16 months after the initial request for documents proving residency. I sent the new information to the advocate, who said she would forward the information to the IRS.

When I called to follow up the advocate informed me that the examiner had disallowed the case because no proof had been provided for the six months of residency. “The only thing we can do is appeal the decision,” she explained.

I asked if she had provided the lease to the examiner and she answered, “Certainly I did.” But three days later I received a letter from the auditor that contained no reference to the lease agreement, so I contacted the advocate and asked to speak with her manager.

Another 26 days went by before the advocate’s manager finally returned my call. We went over the history of the case and the hardships the taxpayer had experienced due to the drawn out audit process. I explained that no one lives their lives thinking that they are going to be audited and that they will need to prove that someone lives with them. We reviewed all of the scattered pieces of evidence that proved that at different times in 2013 the children had lived at the same address as the taxpayer. “It is illogical to think that these children lived anywhere else,” I argued. The advocate’s manager promised to forward the items herself to the correct IRS examiner for me.

One month and five days later I received the ultimate phone call from the advocate. Appeals had ruled in favor of the member and the member’s refund of over $9K would be going out by mail.

Resolving the case had taken five-hundred and sixty-six days from beginning to end. Persistence paid off once again.
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Posted: 12/1/2015 6:03:26 AM
Tags: CP75, dependents, earned income credit, IRS, notice of deficiency, refund


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