An Amount Owed Turned Into a Refund

In March 2022, TaxAudit member, Jake, received a letter from the IRS. He reluctantly opened the envelope and was stunned after reading the message inside. The IRS had sent him a CP2000 notice informing him that the income he had reported for 2020 didn’t match the income they had listed for him, and that he owed almost $25,000 in taxes.

Doing his best not to panic, he wracked his brain trying to figure out what he should do next. That’s when it hit him – he remembered that he had purchased an Audit Defense membership while filing his taxes through TurboTax. He nervously reached out to TaxAudit customer service, who was then able to pair him with a Case Coordinator who would collect all the necessary paperwork, assess it, and assign him to a Tax Professional who would guide him through his case with the IRS.

Jake was assigned to his Tax Pro, Debbie, in just a few days and explained to her the reason he believed he was being audited. He had withdrawn money out of his 401k account under the Covid relief CARES Act and, as he understood it, he had the option to repay it in three years, or split the income across three years: 2020, 2021, and 2022. He also noted that he was in the process of moving at the same time, so he didn’t get all his mail, and never received the 1099 forms he needed to report the income.

Jake’s Tax Pro, Debbie, explained that he should request copies of the necessary 1099 forms from his 401k provider and send them over to her along with a power of attorney so that she could work with the IRS on his behalf. She also clarified that he would be able to either report all the income in 2020 or split it into thirds and consider it as income being spread over three years.

Jake carefully considered his options and decided to report the income over three years. After doing the calculations for him, Debbie noted that if the IRS authorized these adjustments, Jake should receive a $2,400 refund for 2020, as opposed to owing almost $25,000!

Debbie completed her response to the IRS and enclosed the paperwork necessary to list the new distributions. Now it was time to wait to hear if the IRS would accept the changes. She let Jake know that it would possibly take the IRS several months to send a response, and the waiting game began.

Four months later, Debbie received a message from the IRS and happily relayed the good news to Jake: they had approved the new distributions, and he would receive $2,400 instead of owing $25,000! Jake was delighted with the result of the case, and grateful for the hard work and diligence of his Tax Professional.

At the conclusion of Jake’s case, he had this to say: “Great work TaxAudit! My check is in the mail soon!”

*Some names and identifying details have been changed to protect the privacy of the individuals.