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How to deal with the IRS

Old 07-09-2013, 08:58 AM
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Default How to deal with the IRS

I'm looking for advice, here is the situation. My wife and I retired last year so during the course of the year we converted our 401s to IRA. Then I converted my retirement to an IRA. This meant that the majority of our cash is in tax deferred accounts.

We also decided we would buy a second house in a warmer climate. We found a house in the area we were interested in, it was a short sale so we made a cash offer that was accepted in Nov. 2012. prior to the end of the year we withdrew the funds from our IRA's to pay for the house and paid the tax prior to year end.

By the end of Jan. this year it became apparent that the house deal was going south so we rolled the cash back into our IRA within the 59 days. This is an IRS requirement and it is allowed once a year. However the tax was paid to the IRS and should be refunded as a tax overpayment.

I filed my tax returns prior to 4/15 I got a letter from the IRS in May stating that they were reviewing my tax return documentation and they had 45 days to complete their review. This review was to be completed by mid June. June came and went without any updates from the IRS. I finally got through to a IRS rep. and was told the review wasn't finished and that they would get back to me in 45 days.

I can't believe that they can just disregard their own rules and can extend their review without any notification. This refund is not a trivial amount of money. Their rep was no help, where do you go to get more information. I know that if I owed the IRS this amount of money they would not be as capricious in their actions. Anyone have any advice or is this just another BOHICA moment from our government?
Old 07-09-2013, 09:02 AM
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They're the IRS, and do whatever the F they feel like.

Get a tax attorney.
Old 07-09-2013, 09:19 AM
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Originally Posted by CJS View Post
They're the IRS, and do whatever the F they feel like.

Get a tax attorney.

Thanks....That is my next move, I just wanted to avoid loosing more money if I don't have to..
Old 07-09-2013, 09:24 AM
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According to the IRS, it's not YOUR money...It's THEIRS.
Old 07-09-2013, 09:25 AM
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The IRS is an organization that has always projected a public image of omnipotence. They have to, or otherwise people would stop paying taxes en masse if they felt that they could get away with it. Any sign of weakness on their part could collapse our whole system of govt.

Get an attorney.
Old 07-09-2013, 09:27 AM
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i had the exact thing happen this year, first time in > 30 yrs still waiting, going to call my accountant now
Old 07-09-2013, 09:37 AM
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Contact the IRS taxpayer advocate service.

The phone is state dependent. Google contacting taxpayer advocate service for the state listings.
Old 07-09-2013, 09:41 AM
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Guilty until proven innocent
Old 07-09-2013, 09:41 AM
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Hmmmmm.....this could be tricky. I didn't read very well since I am at work but look at this if you have time. It may or may not apply as I'm not 100% sure what is going on with all of you accounts.

"Waiting period between rollovers. Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.
The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA."

http://www.irs.gov/publications/p590...link1000230568
Old 07-09-2013, 09:51 AM
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Im meeting wiht our local IRS gastopos tomorrow. Seems lots of letters went out this year, must be conference time again.
Old 07-09-2013, 09:55 AM
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Originally Posted by Trollin4Tuna View Post
Hmmmmm.....this could be tricky. I didn't read very well since I am at work but look at this if you have time. It may or may not apply as I'm not 100% sure what is going on with all of you accounts.

"Waiting period between rollovers. Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.
The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA."
The account that we withdrew the funds from existed for more than a year.
I 'm pretty sure that we followed all the rules. but this does bring up another question that is " if we paid taxes on the funds that we withdrew and then rolled them back into the IRA, are they taxed again when they are distributed?
Old 07-09-2013, 09:57 AM
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Tell them you are one of the 47%'s and just want your EBT card and free phone. That should take care of everything.
Old 07-09-2013, 10:03 AM
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The review could easily be related to an identity theft issue. I have run into this several times. Did you file electronically?
Old 07-09-2013, 10:07 AM
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Originally Posted by Sprockets View Post
The review could easily be related to an identity theft issue. I have run into this several times. Did you file electronically?
I did
Old 07-09-2013, 10:10 AM
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Originally Posted by finadict View Post
The account that we withdrew the funds from existed for more than a year.
I 'm pretty sure that we followed all the rules. but this does bring up another question that is " if we paid taxes on the funds that we withdrew and then rolled them back into the IRA, are they taxed again when they are distributed?
So all the money went in to one IRA? I think I was confused thinking there were muliple distributions to and from IRAs.

Since you say tax was paid, was any money withheld from these distributions? If so that would be taxable if not replaced in the time frame.
Old 07-09-2013, 10:13 AM
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Originally Posted by Sprockets View Post
The review could easily be related to an identity theft issue. I have run into this several times. Did you file electronically?
I bet it is because he received a 1099-R that had a 1 in box 7 since he didn't do a trustee-to-trustee transfer. More info needed but I bet this happened. Especially since it was in 2013 he put money back in.
Old 07-09-2013, 10:14 AM
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We filed just before the deadline and had a large amount ($50k) coming back due to some changes in business, etc. They sent us a letter at the end of April that they would be reviewing it and get back in 60 days. We actually got the money... closer to 80 days. We didn't hire or pester, just prayed.
Old 07-09-2013, 10:22 AM
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Originally Posted by Trollin4Tuna View Post
So all the money went in to one IRA? I think I was confused thinking there were muliple distributions to and from IRAs.

Since you say tax was paid, was any money withheld from these distributions? If so that would be taxable if not replaced in the time frame.

My wife and I file jointly, we withdrew the funds for the purchase out of her IRA and rolled them back into her account when the sale went south. I paid the taxes out of my account.
Old 07-09-2013, 10:23 AM
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Originally Posted by reelyreely View Post
I did
Was it formally accepted via an acknowledgement?
Old 07-09-2013, 10:25 AM
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Originally Posted by Sprockets View Post
Was it formally accepted via an acknowledgement?
thinking back I believe the receipt of the return was accepted via an acknowledgement but I am not sure. At office now file is at home with all copies of all things IRS

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