Discussion:Complicated problem, requires some oppinions

Basically, I need to know if I have any recourse for a mistake made on the part of the IRS , and how to handle my mistake... I have all documentation, canceled checks etc.

These are straight facts as follows:

I have returns for the past 6 yrs to file (currently they are in a CPA office waiting for my signature) I owe approx. 10,000 including interest and penalties Most of that is for 2001 and 2002. That's my fault. 

In 1993 I had a retail store and was current and in good standing thru 1995 (business and personal)

In 1995 an end of year reconciliation was not done properly, thus, showing I owed 20,000 income tax, This we whittled down to 10,000 (I have details) Turns out, with a proper reconciliation, would have actually showed a tax liability of only several hundred dollars. I did not find this out until after the filing was done (my first quarter of 1996 I lost my shorts on paper)

I hired a new accountant and had to pay 10,000 +2500. in interest and penalties. It took about 5 months to pay. Meanwhile, I got behind in other fiduciary responsibilities to the state and IRS for the first 2 quarters of 1996. We were current for the 3rd and 4th quarters of 1996 (I essentially I paid the IRS money I didn't owe them with money from withholding and etc.) That's how I got behind. An amended return was not filed (at my CPA and business adviser's recommendation; he had his reasons).

On Jan 1st 1997 the same CPA and advisor put a plan together to handle the first 2 quarters from 1996, The following is for federal, (state was on a different plan and not an issue now) The plan was carried out as follows: Jan 1st 1997 a check was sent for approx. 2,000.00 with a payment agreement for 250.00 WEEKLY (this was for the past due approx. 11,000.) plus all current taxes etc. were paid also on a WEEKLY basis. So in 1997 we were current.

In June, July, Aug, (1997) we received notices of failure to pay, and we addressed that. The IRS wanted proof of payment, so I sent copies of all canceled checks. Then they wanted copies of the front and back. We sent that, as well. In Aug, they requested the physical checks We refused to send the actual checks and told them they can come to our business and see them.

Within approx. 4 weeks, the IRS sent an electronic lien notice telling me I had 4 days to pay from the time I received it, or they would seize the business checking account on Monday morning. I retained a bankruptcy lawyer that Saturday, filed and notified the bank. As it turned out, the IRS had never applied my payments to my account. In 1999 they started to credit my account, 2 YEARS after I was forced to close my business, which is also 2 years after I stopped sending them any money. (The money that was being credited to my account in 1999 was all received by them from me in 1997 this is the same money that they claimed I never sent. Note: all the checks were written directly to the IRS with account numbers noted on memo lines and appropriate coupons attached.)

Since then, I have been told some internal fraud was going on within the IRS, that would explain why they didn't accept the routing numbers on my canceled checks as proof. Anyway, I told them in 1999 I would never send them another nickel till they reconciled my account, and have not.

Now today, I find out that they have no records (at least per my transcripts) and my account appears to have been keyed out (erased or zeroed out).

My question is three-fold. Do I have any recourse for wrong doing on their part? I know there is a statute of limitations, but I did lose my business. Can I get anywhere with them as far as leniency in regard to my tax liability for 2001 and 2002 ? As for 2003 -2006, I owe nothing. Finally,can the losses I incurred on paper from the closing of the business in 1997 be carried forward to offset income as far forward as 2001 and 2002 ? ty for reading. I can assure you; it was more painful living it than reading it ...dan

You should be completely organized in both your paperwork and your ability to communicate in order to get the best results.

Good luck!

If you have the prior 6 years tax returns that IRS is requesting, sign them and send them in. I would then request a transcript from IRS or an account reconciliation to see what they posted to my account for the years before.

Could be the IRS has posted payments to an EIN and not to your SS#. Either way, a transcript will help you find out what is behind it :)

well written, but the person obviously has some major problems and he is asking us for some guidance. I have clients who can barely put together a complete verbal sentence, but that does not mean that they don't deserve the best I can give them. Let's lighten up a bit.

The following is a list of professionals whose help I've sought:

a tax attorney (300 dollars per hour)in 1999 who told me "If you owe the money, you've got to pay it

a third CPA

I contracted with JK Harris in 2004 to the tune of $1400 who sent us the wrong for forms to fill out, did not request transcripts as agreed to, and I am not sure they ever established power of attorny. Basically I fell into a giant crack. After a lengthy letter to their complaint department, they finally returned one of my calls and admitted on the phone that I should have been handled by a different division and appologized and offered to continue services. After my polite decline, they refused to refund my money.

regarding my transcripts: I tried three times to get my transcripts, third time was successful. They show no tax liability for the business.

regarding my EIN: in my bankrupcy proceedings, the IRS claimed myself as personally liable and attatched it to my SSN

Sandysea, could you please expand upon the topic of being "finacially disabled" or provide some referrences?

my purpose in posting on this forum was not to become a tax attorney or a CPA, but to glean some wisdom and to get some opinions on strategies and tactics that I may explore

Obviously, as you can expect, I am gunshy as every time I seek help from a profession, the plot seem to thicken

Just because I'm doing research on a surgical proceedure, doesn't mean I plan to "scrub in" and perform it myself

Financially disabled means that you were and are (during the statute limitation period(s)) unable to manage your financial affairs due to either a mental or physical disability that prevented you from making sound financial decisions. If you had a spouse during that period, then she would have been able to do these things for you. It is a tough thing to accomplish from what I have heard, but I am attempting it with a client who indeed is permanently and totally disabled.

Try to find someone who will work with you to get the account current. If your transcripts show no tax owed, then it appears as though this has been solved somewhere along the way. A good idea is to try and visit your local IRS office (you can find this on the IRS website) and see what they have on account for you.

Good luck to you!!

I didn't think you were disabled; I was only giving you the definition as I understand it for "financially disabled"....