Resolving issues with the IRS

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Last substantive revision date
2016-10-15
Last modification date
2022-05-03
Generated on
2024-04-30

This page details my experiences with the IRS as I filed my first tax return.1 This is intended as a record of what happened, but also an anecdote or guide of sorts on how to resolve issues when dealing with bureaucratic systems.

On my original Form 1040, I accidentally entered my failure-to-file and failure-to-pay penalties on line 79. As I explained in a Personal Finance & Money Stack Exchange question:

Previously I asked “Where is payment for failure-to-file and failure-to-pay penalties included on Form 1040?” There I found out that the failure-to-file and failure-to-pay penalties should not be included on line 79.

I made the mistake of placing my failure-to-file and failure-to-pay penalties on line 79, so that the IRS decided to calculate penalties on the amount that already included the penalties. In other words, call my total tax owed X (i.e. what should have been on line 78) and the penalty for this Y (what should have been on the bottom margin). Then I already paid X + Y to the IRS, but the IRS calculated penalties on the amount X + Y rather than on just X, so it is requesting more money. In other words, once the error is resolved, the amount I should pay already matches the amount I did pay (so no net exchange of money is required).

Specifically, I received a CP14 notice from the IRS.

You will notice that I asked a question about the penalty location before I asked about amending the return. I also asked on Quora “If I incorrectly included my failure-to-file penalty on line 79 of Form 1040, how should I amend this?”

Vipul Naik answered my question and figured that I should file Form 843. As I explain in the comments to his answer, I called the IRS, who I had trouble reaching: my specific case after entering in the sequence of numbers was an automated response, and they hung up; I actually called the IRS about four or five times, but because the system for receiving the number sequence was so unforgiving (they wouldn’t accept a number if I entered it too early, and sometimes even when I pressed a 9 to repeat the instructions, I didn’t do so soon enough to prevent them from hanging up on me), they hung up on me each time.

I then called the TAS toll free number. After being forwarded once (by a person who said I should file Form 1040X, and when I explained further just gave up and forwarded me), I spoke to someone (who consulted a supervisor). He told me my situation was “unique”, and eventually told me to fill in Form 843 and that I should attach a letter explaining my situation. When asked, he said he didn’t know what the expected response would look like, said the response would probably take 4–6 weeks, and that I should follow up by calling the IRS if I don’t receive a response by then.

Takeaways

Timeline

April 19
I didn’t manage to finish filing my tax return; the penalty amount is small so it wasn’t a big deal.
April 28
I filed my tax return.
June 21
I received a CP14 notice from the IRS (notice dated June 20).
June 28

I called the IRS for the first time to tell them I disagreed with the amount due notice (CP14), using the number they provided on the CP14 for disagreements with the amount due. During the call I realized my mistake, and that the failure-to-file and failure-to-pay penalties shouldn’t have been on line 79. The IRS representative told me they had to honor my initial filing of Form 1040. I asked on which line the penalty should have been listed; the representative told me to look in IRS Publication 17 (288 pages long), section 1 (only when pressed further), but could not cite a paragraph. I asked to talk to somebody more senior, but was denied my request. I asked what I should do next to correct this issue, but was told they could not help me, and that I would have to call in again. I later looked in Publication 17 but could not locate this information in a reasonable amount of time.

The whole phone call process on this day took around 1 hour (from around 1 PM to 2 PM).

June 28
I asked “Where is payment for failure-to-file and failure-to-pay penalties included on Form 1040?” on Finance & Money Stack Exchange (4:34 PM). The question was answered about 3 hours later.
June 29
I asked “If I incorrectly included my failure-to-file penalty on line 79 of Form 1040, how should I amend this?” on Quora (8:13 PM) and “How should Form 1040 be amended if error was introduced on lines 78 and 79?” on Finance & Money Stack Exchange (9:13 PM). I decided to wait a day to see if a definitive answer emerged.
June 30
Vipul answered my question on Finance & Money Stack Exchange (10:44 PM).
July 1

I called the IRS, but did not manage to receive a human response as described above in the page. I then called the TAS. All of this happened from around 7:30 AM to 9:30 AM.

The whole phone call process on this day took a little under 2 hours.

July 1

I wrote a letter to the IRS to attach with my Form 843 using the following sources:

July 1
I asked “Where to file Form 843 for penalties?” at 9:32 PM.
July 9
Finally mailed the letter and Form 843 to the IRS.
July 23
Received a CP501 notice from the IRS (which is dated “July 25”).
August 30

In the morning, I received two things in the mail:

  • A letter dated August 26 saying they received my letter on July 18, but that they are working on my situation and need an additional 45 days, and that I don’t need to take further action.
  • A CP503 notice dated August 29.
October 15
I received a CP21C notice from the IRS, dated “October 10, 2016”. The notice states that my amount due is $0.00.

Thanks to Vipul Naik for the following links.

  1. Tax year 2015 was the first year for which I filed a return, because I had made money doing content creation work under Vipul Naik. For more, see my page about Wikipedia.↩︎

  2. In other words, dealing with the IRS is more like asking a question on Stack Exchange than asking a question on Quora.↩︎