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Author: brucedoe Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121189  
Subject: IRS - What Next? Date: 6/26/2007 3:54 PM
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This has become a serious mess. I hope you experts will read the complete explanation below.

In 2006, we thought that Schwab would make automatic withdrawals from an IRA, but they didn't. Upon the advice of people from this board, we paid the withdrawal in 2007 as soon as we found out that it hadn't been withdrawn. Then we also withdrew 2/3rds of what we should withdraw in 2007. We filled out the failure to withdraw on Form 5329 and filled out a waver explanation on the 5329. All this was done on Turbo Tax and the proper additional tax on IRAs appeared on line 60 of the 1040.

We filed the tax return by mail on April 11 and the return card said the forms were received on April 14th. Enclosed with the forms was a check covering what we owed the Treasury and our bank says this check was deposited on April 16th. (We would have had a refund except for the IRA screwup so the check was less than the additional IRA tax.) Also enclosed was a letter explaining the IRA withdrawal screwup and requesting a refund as we tried to obey the law as soon as we found the error and withdrew money for 2006 (in 2007) and also most of what we should withdraw in 2007. This was backed up with copies from our Schwab account showing, indeed, that we had done had done these withdrawals from the IRA.

Somehow, maybe I am getting senile, I put my wife's SS# on line 31b of the 1040 instead of my ex-wife's SS# for court ordered alimony. The IRS picked this up and sent me a letter June 11, 2007 disallowing the alimony payment. I called the IRS about how to correct this error and was told to send a complete copy of our tax return to the Richmond IRS office with a letter of explanation. We did this and the return card says it was received June 21st.

Now we have received a second IRS letter dated June 24th stating that (a) We failed to pay our taxes on time (though the return was mailed by certified mail on April 11 and received by them on April 14th), and (be) we owed for the entire additional tax on the IRA plus penalty and interest. There was no acknowledgment of our letter or the Waver Explanation or that what we paid wasn't enough or that the additional tax owed was in fact listed on line 60 of the 1040 so included in the calculations. They said we owed the whole thing, apparently again!

So I called the IRS again. After considerable consideration, the man I was talking to said he thought we should wait to hear a reply to our SS# dis-allowance correction, i.e. we should do nothing now. He thought the SS# error was the cause of the problem. He confirmed that our check to the Treasury had, indeed, been received.

Question: Is this last advice sound that we should wait for a response to the SS# screwup?

brucedoe
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