I first spoke with the members because they received a CP2000 notice from the IRS. The notice had to do with retirement distributions on their 2017 tax return. When the taxpayers were preparing their tax return, they accidentally made a keying error in entering the distribution amount on one of the 1099-R’s. After reviewing all the taxpayer’s Forms 1099-R, I determined that the IRS notice did appear to be correct, but I explained that we would be able to request penalty abatement from the IRS. I told the members that it was not guaranteed that the penalty would be removed, but that we would ask the IRS if they would remove it. After sending the request to the IRS explaining that the taxpayers had made an inadvertent error and had a longstanding history of compliance, we finally heard after several months that the IRS had waived the penalty. The taxpayers were very happy to have received this news.
We then proceeded with closing the case for our members. Bob G. called them to do the closing call and explained to the taxpayers that they should amend their state tax return because the IRS would notify the state of the changes made. As a courtesy, we provided the member with our estimated change to the tax for their state return. In this case, due to the change in their income, the members wouldn’t have a balance due because they now qualified for an increased pension exclusion and had forgotten to include some state withholding when they filed their original tax return. We closed the case and did not expect to hear from the member anytime soon.
To our surprise, I got a phone call from the members shortly after we closed their IRS case saying they had already received an adjustment notice from the state, but the notice showed a balance due, which was not expected. We quickly opened a case for the state and secured a Power of Attorney. After we reviewed the notice, we realized the state was not giving them credit for the increased pension exclusion or the withholding. After several phone calls to the state, we finally received the recomputed notice from the member, with a check for their refund attached. The members were so happy for our help with their case that they decided to surprise us with a box of cookies and other treats.
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