IRS Accountability for error

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kaltsa

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I was audited earlier this year for my 2005 taxes. The IRS found that I owed about $3,000 (unless i could prove otherwise with recepits, etc). I called and asked to pay, right before I sent in 2007 taxes which I was getting back money (about $5,000). Since the amt I was getting back was more than I owed, the person from the IRS said don't pay over the phone b/c they may double charge me (once over the phone and also by taking funds from my return). So I waited for the remaining amount from my return (which I thought would be around 2,000).

Instead I received $5,000 for my return. I called the IRS immediately and told them that they did not take out the amt owed to them. They said they did and I was free and clear. I was completely confused on how they got their money but they assured me they got it from my return (this is all documented per my request by the IRS). So I figured maybe I was really getting $8,000 and I would receive $5,000 after paying the IRS (wishful thinking).

A couple of months go by and I am suppose to get the GW Bush check. The IRS takes the money saying I owe them $3,000. I call to ask what happened, the person on the phone acknowledged my last conversation but that they had made a mistake and I still owe the $3,000.

Since the time I first called them, I lost my job and spent what I had marked to pay back the IRS. Shouldn't they be held accountable to their error? Now, not only will I have to pay them their money, but additional penalty and interest (which I assume I can try to fight). What do you recommend? Thanks!
 
If you underpaid, then it is what it is. You knew you were getting back $5,000 so that really was wishful thinking. With regard to them being accountable for their error, yes, I'd be furious too. Have you discussed the issue of the penalty and the repercussions of their mistake? Perhaps something could be worked out. But fighting the IRS is unfortunately like trying to kick a brick wall...
 
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