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Just received a CP504 on what seems to be an IRS mistake. Any options for dispute at this point?

 

I received a CP22A in July for my 2019 taxes for $1045. (I had freefiled Turbotax). The notice said I had amended my return and now owed this money. I didn't amend it. (In 2019 I had done a Roth conversion for about 10,000 and didn't have much else on my taxes.)

 

I called the 800 number several times. Each time it was like starting over. I was getting nowhere. Eventually I contacted the IRS Tax Advocate Service. They said they couldn't help me, I didn't qualify, but they put me in touch with someone in the IRA division of the IRS.

 

I spoke with the IRA division rep in August for about 30 minutes. He said I should have filed a 8606 (turbotax didn't ask for that), but that was just a technical mistake. (I immediately sent one in.) He said that if my return was correct to my financial transactions for the year, then it was an IRS mistake. (it was, I just had that conversion and a small bit of gains from my investment accounts, no income).

 

He told me he had to give it to his boss to fix, he couldn't access all my financial records. He said it should be resolved within 30 days.

 

30 days later I hadn't heard anything, but I decided to follow up. I had no way to contact him, so I was back to the main IRS line. No one I talked to had any record of my past stuff including the IRA guy. I tried calling several times later, no progress.

 

A week ago I get a CP504 saying they're going to go into collections. So I guess the guy who was going to give it to his boss didn't or something. That CP504 is dated Dec 21.

 

Questions:
* If I pay the notice to avoid collections, do I lose my right to dispute it with the IRS?
* I read a few cases of people having better luck doing written correspondence. Is that worth pursuing at this point? (Since phone correspondence was a complete waste)
* If I do written correspondence, any guidelines for how best to proceed?

 

FYI, I tried using the Tax Audit service through TurboTax (called them this week). They got back to me and said they can't help me due to it being at the CP504 level. (So lesson to me would be to involve a service like that as soon as I get the original notice, instead of trying to work it out with IRS myself.)

 

Here is a link to my original post on these forums asking about the issue I thought I had done wrong (but don't seem to have) around making a Roth Conversion. 

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2 Replies

Just received a CP504 on what seems to be an IRS mistake. Any options for dispute at this point?

Still interested in any suggestions if you have them. Not sure what my next move is on this. Thanks.

Just received a CP504 on what seems to be an IRS mistake. Any options for dispute at this point?

I would start by calling the number on the notice and then also not file a state return with a refund on it until you resolve this issue.  Sadly what you mailed in before may still be sitting in a pile of back logged work on a desk somewhere. 

 

 

https://www.irs.gov/individuals/understanding-your-cp504-notice

 

What happens if I don't pay or contact the IRS?
If you don't pay the amount due, we may seize ("levy") any state tax refund to which you're entitled. This is your notice of intent to levy as required by Internal Revenue Code section 6331(d).

If you still have an outstanding balance after we seize ("levy") your state tax refund, we may send you a notice giving you a right to a hearing before the IRS  Independent Office of Appeals, if you have not already received such a notice. We may then seize ("levy") or take possession of your other property or your rights to property. Property includes:

  • Wages, real estate commissions, and other income
  • Bank accounts
  • Business assets
  • Personal assets (including your car and home)
  • Social Security benefits

If you don't pay the amount due or call us to make payment arrangements, we can file a Notice of Federal Tax Lien on your property at any time, if we haven’t already done so.

If the lien is in place, you may find it difficult to sell or borrow against your property. The tax lien would also appear on your credit report ― which may harm your credit rating ― and your creditors would also be publicly notified that the IRS has priority to seize your property.

 

Who should I contact?
If you have any questions about the notice, call us at the number printed at the top of the notice. A customer service representative will assist you.

 

What if I don't agree or have already taken corrective action?
If you do not agree with this notice, contact us immediately at the number printed at the top of the notice. We will do our best to help you. If you have already paid this liability or arranged to pay it with an installment agreement, you should still call us at the number printed at the top of the notice to make sure your account reflects this.

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