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How to resolve a CP504 when calling the IRS doesn't accomplish anything?

I received a CP504 notice in November (claiming they had notified me before of a penalty I owed, when there was no such prior notice). According to max tax records on the IRS website, I owe an "Underpayment of Estimated Tax penalty"; though why they think so is beyond me. I don't make estimated tax payments at all; all of my taxes are paid through W-2 withholdings, and those are more than sufficient to cover my taxes for the year. I called the IRS in November and spoke with a representative who agreed that the penalty makes no sense. He was unable to file the abatement for it himself; apparently it had to be escalated up the chain for someone more senior to deal with. I was told it would be about a month to resolve. 7 weeks later, I get another letter saying this is my final notice and that the IRS is going to put a lien on my assets if I don't pay up immediately. I call the IRS again, and speak to another rep, who ends up hanging up on me 2 hours into the call (almost all of that time I was just sitting on hold, waiting). I really don't want to go through that again, and I also refuse to pay bogus penalties, so is there an alternative way to dispute this that end-routes the endless phone calls with reps who either can't figure out how to fix the issue or don't have the authority to fix it? The clock is ticking on this.

Side question, is this something that Turbotax Audit Defense would help with? I know it's not an audit, but figure its worth asking on the off chance that the answer is yes, as I do pay for that service.

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1 Reply
BillM223
Expert Alumni

How to resolve a CP504 when calling the IRS doesn't accomplish anything?

The first thing you need to do is stop calling the IRS and get everything in writing instead.

 

Unfortunately, you should have responded in writing to the first IRS letter that you actually received.  At this point, it may be taking a chance to respond to the Final Notice, in case you have another foul-up in the mail.

 

What you might do if you don't want to take a chance on replying by mail to the Final Notice, is to contact a local Enrolled Agent or CPA. An Enrolled Agent (EA) may be your best choice since they primarily deal with the IRS. The EA will possibly call the IRS and lean on someone or know how to write your response to put you in the best light.

 

To find a local EA, see this webpage.

 

In the meantime, write down everything you remember like the dates of the calls, what was said, etc.

 

As for Turbotax Audit Defense, I am not sure what their current services are, but it is worth a call.

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