Tuesday, September 25, 2007


A client, whose, in our opinion, perfectly legitimate alimony deduction for 2004 was questioned by the IRS, recently received the following letter, dated September 18, 2007:

“Dear Taxpayer:

Thank you for your correspondence of Apr. 20, 2007.

We haven’t resolved this matter because we received a large volume of similar responses at the same time. We haven’t been able to complete our review of the information you sent. We will contact you again within 60 days to let you know what action we are taking.”

Prior to that, the taxpayer had received a letter dated July 11, 2007 referring to “your correspondence of Apr. 20, 2007” and stating that the IRS needed additional time to review the issue and would respond within 45 days.

The initial response to my correspondence of Apr, 20, 2007 was dated May 25, 2007, and said that an additional 45 days was needed before they could respond to the issue.

My correspondence of Apr. 20, 2007 had referred to a previous letter on the subject that I had written on December 16, 2006, which had been totally ignored.

While all this was going on, we also received a letter from the Internal Revenue Service dated July 20, 2007, which stated that the alimony deduction claimed on the 2005 Form 1040 had been denied and requesting a payment of additional tax.

I wrote to the IRS stating that we were in the process of resolving the exact same issue for 2004 and requested that further action on tax year 2005 be deferred until the resolution of the 2004 issue.

We received a reply dated September 10, 2007, which stated that the IRS was “still reviewing your response [my letter regarding 2005] and will reply by 9/24/2007.”

What is going on down at the IRS?

When the Internal Revenue Service writes to a taxpayer you have to drop everything and respond promptly or else face liens, levies, and money being withheld from subsequent federal and state refunds and rebates. Yet when a taxpayer, or his duly authorized representative (in this case I have a signed Form 2848 - Power of Attorney and Declaration of Representative - on file for the taxpayer and returns), writes to the IRS he has to wait 150 days for an answer (actually more – since the initial inquiry was sent in December of 2006)!
I have submitted this case to the
IRS Taxpayer Advocate Office. According to the IRS website, “You may be eligible for Taxpayer Advocate Service assistance if….You have experienced a delay of more than 30 days to resolve your tax issue.”
I will let you know what happens.

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