The IRS Hotline Grows Cold

Your first reaction to that IRS envelope you are about to open is that it is NOT good news.  Most of the time, it's a math adjustment based on your reported income and the income the IRS has received from third party records. 

According to the IRS, you have left something out or grouped it incorrectly. 

Once you forward the notice to my office, I respond with a letter to start a document trail and explain why we disagree with their assessment if they have misinterpreted their 3rd party data.  Remember, the IRS is not always correct. 

Then the IRS sends out a second notice before they even read my first.  The paper war starts.  I respond with my second letter, advising them of my initial response, and reattaching full documentation.

The IRS then sends out a third letter which can be confusing.  It states that they need more time (45-60 days) to read thru their correspondence. 

In the old days (last year), I would call.  I would be put on hold for sometimes over an hour. But the case would get resolved about 90% of the time.  

CPA's have a very special (CPA only) "IRS tax practioner hotline". The agents at this phone number were well trained and were very effective in resolving a matter during the phone call. 

But NOW, the hotline has grown cold. When I do get through, the "customer service" agents often cannot resolve my issue.  I am asked to respond in writing (which I already did - twice).  I am told the "correspondence unit" will handle the matter.   I know they can read, but will they inpret the law/facts correctly without guidance or discussion. 

The inability to resolve any tax issue becomes worse if the proposed assessment has been transferred to the collection department.  The collection staff are trained in "collection".  They have no idea how or where the numbers came from. They don't care.  Their job is to collect.  In order to resolve an issue, the case must be sent back to the "under reporting unit" and try to resolve the variance. 

Unfortunately, the collection department will continue to collect and process even if another IRS department has acknowledged receipt of my letters.  So now the only purpose of my call is to request that the collection process  be placed on hold while I wait for the other department to read my ealier correspondence and respond.  The collection department will typically place a two to eight week hold on collections, depending on the agent. I often have to call collections several times to get the "HOLD" extended because the other IRS department is still working on the case. 

To make matters worse, the "correspondence unit" doesn't always take care of everthying at once.  It is not uncommon for the IRS to point out several discrepancies.  I respond with a letter correcting the discrepancies and providing back up documentation.  The IRS corrects one of them and send out a letter for the second issue.  I respond again with the same documentation, asking them to resolve the second matter.  A year later, this second matter is finally resolved. 

Things are NOT better at the California Franchise Tax Board.  They are even WORSE AT ANSWERING THE PHONE.  My calls reach a voice mail system which tells me that because of the high call volumn, my call cannot be taken at this time.  And then, my call is disconnected. 

Dealing with these notices is frustrating and time consuming.  It will not be fast.  This is why I recommend that you take the extra moment to make sure you have reported all of your dividend and interest income.  Make sure your brokerage firms are reporting to you via PAPER- because you might forget to download your dividend or stock sales.  And most of all, don't forget you retirment withdraws and pension payments. 

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