Tax Help

[tessaesque]

Help! I received a letter from the IRS last night claiming that I under-reported my income by $12,830 in 2011. They're now demanding that I pay a significant amount in taxes, interest, and penalties against that $12,830. The problem is, I didn't under report. I have my W-2s showing that the income I claimed is the income I received, and I have deposit records for all of my payroll checks (but those, of course, would not necessarily PROVE anything, as they are less taxes and insurance payments). What I do NOT have is a complete record of pay stubs. Somewhere in the move to the new house those documents got lost in the shuffle.

The paperwork says that the discrepancy is specific to income from one of the two employers I had that year. Would a notarized letter from my payroll department listing my total gross income and tax deductions for 2011 suffice to prove that any additional reporting submitted to the IRS is false? My assumption is that the payroll department either applied somebody else's payments to my SSN or the payroll company that processes our checks screwed up.

 

[Superfly]

I think you should probably bite the bullet and call the IRS. They'll tell you what you need to give to them to prove that the income isn't yours. Good grief, how could something like this happen? How could it be attributed to your SSN and not show up on your W-2?

Scary!

 

[GottaGo]

Help! I received a letter from the IRS last night claiming that I under-reported my income by $12,830 in 2011. They're now demanding that I pay a significant amount in taxes, interest, and penalties against that $12,830. The problem is, I didn't under report. I have my W-2s showing that the income I claimed is the income I received, and I have deposit records for all of my payroll checks (but those, of course, would not necessarily PROVE anything, as they are less taxes and insurance payments). What I do NOT have is a complete record of pay stubs. Somewhere in the move to the new house those documents got lost in the shuffle.

The paperwork says that the discrepancy is specific to income from one of the two employers I had that year. Would a notarized letter from my payroll department listing my total gross income and tax deductions for 2011 suffice to prove that any additional reporting submitted to the IRS is false? My assumption is that the payroll department either applied somebody else's payments to my SSN or the payroll company that processes our checks screwed up.

Request copies of your W2s from both companies. Make sure any benefits you recieved from each are properly reported on the W2's, and compare it to your tax return. One thing that seems to confuse some employees is if you had deductions from your wages for health insurance, you need to know if it is a Section 125/pre-tax deduction or a standard deduction (post tax).

Before you send them anything, ask by letter sent certified for documentation from the IRS regarding the underpayment. By law, they have to provide you with their documentation to support their claim.

 

[mak2]

I bet someone is reporting income under your social security number.

 

[Superfly]

I bet someone is reporting income under your social security number.

Why would someone do that? Maybe someone who was drawing SSDI or a social program of some kind, who wanted to work, but not be turned over for the income??

Wow - that could be easily traced back to the employer, then the employee.

 

[tessaesque]

I bet someone is reporting income under your social security number.

That was my first thought, but the paperwork lists my current employer as the source of the unclaimed income. So if that IS the case (somebody using my SSN), then it was processed by the girl in our payroll department either intentionally or in error.

 

[Gipper]

That was my first thought, but the paperwork lists my current employer as the source of the unclaimed income. So if that IS the case (somebody using my SSN), then it was processed by the girl in our payroll department either intentionally or in error.

Some employers (shady ones) will over-report wages on a W-2 sent to the IRS and under-report on one sent to you. The reasons for this are obvious - bigger write-off for them, they can keep a few bucks of the discrepancy, etc. Usually with reputable companies it's not an issue. Were you working for some fly-by-night joint?

Usually a problem like this involves one of two forms - a W-2, or a 1099-MISC (self-employment income and what-not). You should call the IRS, have all the information on hand with you, and make sure their information is correct as well. Keep the W-2, because I am hoping that they will check the validity of the company's EIN and make sure no other claims were made to or on that number.

 

[Lutherf]

Help! I received a letter from the IRS last night claiming that I under-reported my income by $12,830 in 2011. They're now demanding that I pay a significant amount in taxes, interest, and penalties against that $12,830. The problem is, I didn't under report. I have my W-2s showing that the income I claimed is the income I received, and I have deposit records for all of my payroll checks (but those, of course, would not necessarily PROVE anything, as they are less taxes and insurance payments). What I do NOT have is a complete record of pay stubs. Somewhere in the move to the new house those documents got lost in the shuffle.

The paperwork says that the discrepancy is specific to income from one of the two employers I had that year. Would a notarized letter from my payroll department listing my total gross income and tax deductions for 2011 suffice to prove that any additional reporting submitted to the IRS is false? My assumption is that the payroll department either applied somebody else's payments to my SSN or the payroll company that processes our checks screwed up.

It sounds like what you got was a letter called a CP2000 (should show in the top right corner of the front page). This letter is electronically generated and reports a discrepancy between what the IRS picked up from the return you filed and what was electronically reported to them from other sources.

Back a few pages in the letter you should find a table looking section that shows "amount reported" and "amount reported to the IRS" (I forget what the exact phrasing is and I'm not in the office right now). Compare the amounts under "amounts reported" to what you put on your tax return. If they all match you're good to go, if not you need to figure out why there is a discrepancy. Don't start sweating quite yet because, in my experience, about half of these notices are wrong or easily taken care of.

 

[tessaesque]

It sounds like what you got was a letter called a CP2000 (should show in the top right corner of the front page). This letter is electronically generated and reports a discrepancy between what the IRS picked up from the return you filed and what was electronically reported to them from other sources.

Back a few pages in the letter you should find a table looking section that shows "amount reported" and "amount reported to the IRS" (I forget what the exact phrasing is and I'm not in the office right now). Compare the amounts under "amounts reported" to what you put on your tax return. If they all match you're good to go, if not you need to figure out why there is a discrepancy. Don't start sweating quite yet because, in my experience, about half of these notices are wrong or easily taken care of.

I talked to somebody at the IRS and she confirmed that they received two W-2 forms from my employer. Best guess is that the original payroll company and the replacement payroll company both submitted W-2s to the IRS. In either case, my company said they're going to get a revised W-2 or draft a notarized document from the company legal department that provides the IRS with payroll information confirming that I do not, in fact, have $12,830 in unreported income for 2011. According to the lady on the phone, that should suffice if a W-2 cannot be generated.

 

[Gipper]

You're clear then. Go take a nap.

 

[Lutherf]

I talked to somebody at the IRS and she confirmed that they received two W-2 forms from my employer. Best guess is that the original payroll company and the replacement payroll company both submitted W-2s to the IRS. In either case, my company said they're going to get a revised W-2 or draft a notarized document from the company legal department that provides the IRS with payroll information confirming that I do not, in fact, have $12,830 in unreported income for 2011. According to the lady on the phone, that should suffice if a W-2 cannot be generated.

Well, good to know that you ended up in the "easy to take care of" half!:lol:

The best one I've had recently was some poor soul who got a 1099-Misc for a little temp work in the amount of $400.00. The IRS managed to misplace the decimal and they got a letter that they had underreported by $39,600.00.

 

[Gipper]

Well, good to know that you ended up in the "easy to take care of" half!:lol:

The best one I've had recently was some poor soul who got a 1099-Misc for a little temp work in the amount of $400.00. The IRS managed to misplace the decimal and they got a letter that they had underreported by $39,600.00.

If it had been me, it would've been an underreport by 40K, since 400 dollars you don't have to report...just barely.

It's good to be your own accountant.

 

[Lutherf]

If it had been me, it would've been an underreport by 40K, since 400 dollars you don't have to report...just barely.

It's good to be your own accountant.

Actually, that's not quite right. You are still required to report the income but it isn't subject to SE tax.....that's one of the problems people often have when they are their own accountant

 

[Gipper]

Actually, that's not quite right. You are still required to report the income but it isn't subject to SE tax.....that's one of the problems people often have when they are their own accountant

Okay, Mr. Picky...you don't have to file.

You tryin' to out-beancount me? Huh? Huh?

 

[CanadaJohn]

I bet someone is reporting income under your social security number.

That's quite possible - identity theft is rampant in the "information" age.

This is just the opening gambit from the IRS - first move is to acknowledge the notice and to seek clarification - ask them to document where the supposed "underreporting" came from. The worse thing to do is ignore it or contact them and "scream and shout" - like any government agency, they are prone to mistakes but they like to be respected.

 

[Lutherf]

Okay, Mr. Picky...you don't have to file.

You tryin' to out-beancount me? Huh? Huh?

OK...I'll give you that one...if it's your only income you don't have to file.

 

[Gipper]

OK...I'll give you that one...if it's your only income you don't have to file.

So this is what happens when accountants fight. My pocket protector can beat up your pocket protector.

 

[Lutherf]

So this is what happens when accountants fight. My pocket protector can beat up your pocket protector.

Careful, my pocket protector is made by Colt:lamo

 

[Gipper]

Careful, my pocket protector is made by Colt:lamo

Mine's Kevlar.

What now?