IRS asked for forms to substantiate 1040X, I sent them, but I got a follow up letter saying they haven't been received

[Omar80]

First off, let me clarify this issue isn't because of Turbotax but because TaxAct messed up my 2019 1040X amended return (it didn't send the corresponding form 8959 and 8960 updates).  This is why I threw in the towel after many years with them and am here now.

I first learned of the issue when I got a letter late January 2021 asking for me to send those two forms.  When I went back to TaxAct and printed the forms, I saw differing values vs the original 1040.  However the IRS had the original values before I fixed a cost basis reporting error.

I learned this after spending 3+ hours on hold with the IRS and finally getting to someone who could pull up my return to confirm the old numbers were there.

I asked if there was a fax number for sending the requested updates, but I was told not, so I mailed the forms (uncertified, unfortunately).  A little over a month later I received another letter asking me to pay the IRS the difference from my original and amended returns because they didn't receive the forms they requested, and that if I wanted to appeal I had to pay first.  So I ended up going to the IRS online payment system and paid that amount using the following classification:

Reason for Payment: Balance Due

Payment Type: Income Tax - Form 1040

My question is whether I did the right thing with this payment, and if not what should I have done?

I assumed my mail is stuck in a trailer and won't be seen for weeks, but ultimately I want them to get my updated forms and for that money I sent to be returned as an overpayment.

Does anyone have suggestions on how to fix this?  I tried calling the IRS and the taxpayer advocate services mentioned in the letter, but both kicked me off right as I got in the queue because too many people were already there...

[MarilynG1]

This is our advice to folks who Received an IRS Letter.

Since you didn't file originally with TurboTax, you may need to continue to pursue through the IRS, or see if Tax Act has a similar route for you. 

[fanfare · Accepted solution]

if IRS finds the forms you sent in and applies them to your amended return, your account will show an overpayment.

Good luck.

If you don't get it in six months, you can file another amendment to your original amendment, this time attaching the correct forms and showing also the payment you just made.

[fanfare]

Are you saying in 2019 you e-Filed Form 1040-X but certain forms that were changed or added due to your amendment were not included in the package sent to IRS? That's nasty.

[Omar80]

Yes, unfortunately.

[Omar80]

Thanks, but the forms weren't listed, and even a search on the IRS website didn't return a result.  However, google brought up this:

https://www.taxaudit.com/irs-audit-letter-324c-sample-1

And what I got a month and a half later (a month after I sent the requested forms):

https://www.legacytaxresolutionservices.com/irs-tax-notices-letters/irs-letter-[product key removed]...

[Omar80]

Actually, I just realized something that's even nastier.  When I filed my 1040X, I didn't request any of the overpayment refunded to me and elected to have it all applied to my 2020 estimated tax.

When I called the IRS, I asked if I could still apply this to my 2020 tax, and was told I couldn't and I had to wait till the matter was settled but could apply it next year.  So now I'm actually out doublle my original overpayment.

It looks like I made a mistake thinking that "amount of claims" listed on the IRS letter is the IRS saying I need to pay that amount back, when it probably meant the IRS Is saying this is the amount of refund in question which they are denying...

I don't know if the fact I applied a payment to my 2019 taxes will cause a complication for me in trying to apply it instead to my 2020 return.  I've always done my taxes but it looks like I may need professional help to sort this mess out.

[Omar80]

The IRS online now shows a negative 2019 balance for the accidental payment I made.  I am hoping the IRS will simply refund the overpayment, or otherwise I will try and get that back as part of another 1040X filing attempt.

[SweetieJean]

The extra forms you mailed in are probably sitting in a pile somewhere.  Per the IRS:

COVID-19 Mail Processing Delays

It’s taking us longer to process mailed documents including:

• Paper tax returns, and
• All tax return related correspondence.

We are processing all mail in the order we received it.

Do not file a second tax return or call the IRS.

Refunds | Internal Revenue Service (irs.gov)

[Omar80]

In case someone else runs into this in the future, I just got good news in the mail today from Austin TX:

Dear Taxpayer:

Thank you for your amended return.

We have adjusted your account as you requested.

I logged in to my IRS online to look up my 2019 tax records, and sure enough it shows my second amended return filed in Apr 7 2021 (I mailed it Apr 3 2021 with standard postage), with a post-dated 10-01-2021 "refund issued" equal to what I expected (original amount owed plus mistaken payment), plus interest.  So am looking forward to seeing this refund direct deposited "in four to six weeks" as the letter said.

Before this day, for a few months I checked the IRS online records and all it showed me was my rejected amended return from Apr 2020 and a negative balance for my mistaken payment back in March this year. 

Am glad that this finally ended up getting resolved!