AARP tax help

BBS, there was  a period of time a few if more years ago when IRS was sending out letters to us that were just ridiculous.   Your post brought back a vague recollection when it wrote to my father challenging a return I had filed not using the correct forms b/c he was dead.   I have no idea which moron made that conclusion or how it was made, but I had to do battle with them for awhile before I convinced that my father was alive.

I may even have called them and had Dad yell into the phone that he's still alive and don't kill him off before he's ready!

I had the impression they hired a bunch of newbies who really didn't understand what they were doing.

I do my own taxes using a tax program. One year, I did not get a form 1099 for a sale of some mutual fund shares, hence I forgot about the sale. I sold because we were losing money in that fund and wanted to get out.

Anyhow, IRS sent us a letter stating that we owed $ 50,000+. ( Insult to injury, the letter was found by neighbor in their mailbox, after they returned from FL for the season!) It was a 17 page letter (whatever happened to the Paperwork Reduction Act?) IRS assumed the entire proceeds of the sale was the profit, hence all taxable.

So I wrote the IRS a nice letter (snark) telling them that I did not receive the 1099 form, hence I was filing an amended return, which included the sale of the mutual fund shares. However, using the IRS prescribed method of calculating the basis (original cost) of the shares, I calculated that I had a loss on the sale. Given that the loss was a write off against any other income, the IRS owed me money. I also questioned the IRS with regard to their unreasonable assumption that the entire proceeds of a sale was the profit, without regard to the cost (basic accounting.) And that a 17 page letter was unnecessary, since all they had to do was ask me what the cost basis was.

I got a nice letter stating the matter was closed, with a check.

I am so sorry. Something like this is extremely stressful. I am a cpa and I do advise that you pay someone to straighten it out if you can afford to. If not, go to the AARP free tax filing and they should be able to help you. The letters demanding money go out on a schedule until the issue is resolved so it is common to get a letter saying you owe and then a letter saying it's under review. You may continue to get the letters saying you owe every month until it's fixed. We live in a world where we can get online or on the phone and fix things quickly but the IRS does NOT work that way no matter how much or how little you paid your preparer. Be patient, it will work itself out. My inlaws used the AARP free tax filing until a few years ago when they finally asked for my help. I will say the preparer they got was excellent and left great notes for them (and what turned out to be me) for the next year. I know it's difficult because no one likes to see letters from the IRS, but be patient and hang in there.

You will get detailed answers if you post this question at www.bogleheads.org.

Include information about what form was missing and you will get good, actionable advice.

If the IRS continues to hassle you, contact the Ombudsperson.   There's usually a paragraph about this potential issue in the first several pages of the 1040 booklet.   The Ombudsperson can intervene and address the harassment.

The IRS advised money was owed because form not completed. I reviewed tax docs myself and confirmed this. I just wish I looked sooner but I took for granted that they knew what they were doing. I also gave them the appropriate information to do my taxes. I believe I started with a complaint to AARP and I found myself in the end on the phone with IRS advising me to appeal to them which I did in Sept.. It is now February and it is still not straightened out. In fact I just got a letter from the IRS telling me to pay the $11,000+ in 15 days or else more penalties and interest. Immediately after getting that letter I get another letter telling me they are working on my review. Obviously the right hand does not know what the left hand is doing. I am having my taxes redone and hopefully can straighten this out. The tax man advised that AARP tax preparers are only equipped to do the most simple taxes. My issue is related to healthcare they the Affordable Care Program which by the way is a farce.

I've been thinking about this and think that you really should advise AARP so it can address the issue, educate that specific worker, and ensure that it doesn't happen again.

Bringing it to AARP's attention is the only way to address this.

This is disturbing, since AARP offers these services to help folks, not bankrupt them.   

$11K is a lot to owe in taxes.    I wonder if there are some miscalculations or other substantive issues beyond using the wrong forms, unless you're dealing with trusts.   Even then, I still wonder about that conclusion.

Maccdc, if it is true they didn't send in the correct forms, this should be provable? Can you pursue a second opinion from another accountant to confirm? It will be cheaper than $11K...