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Old 04-09-2018, 04:52 PM
rockchalk1 rockchalk1 is offline
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Default IRS and Federal Restitution

I have no idea if this is the correct forum for this, so please move to the correct one if necessary...

I am so beyond frustrated and want to know if this is normal!!

My husband took a plea in September, 2016 for a white collar felony. When we changed attorneys in Jan, 2016, his attorney told us the most important thing to do in regards to his sentence was to do what he could to pay his restitution in full as soon as he could before he was sentenced. Getting loans or whatever he could to pay it off. Because we had time and my husband was able to work for so long before the original sentence date (Jan, 2017) he saved and then was able to borrow enough to pay it back in October, 2016. He ultimately wasn't sentenced until September, 2017. So basically the money sat there for nearly a year with the court, but it was a monkey off our backs.

He SS in December, 2017 and in January was required to prove at the prison to either the case manager or counselor that he paid in full. He did and there were no problems. For anyone else, make sure you have those papers sent in as I had to run and send that proof.

Well, unbelievably, today I just got 3 letters from the IRS saying that he owes them restitution for years 2006, 2007, and 2008. The 3 amounts all add up to the amount of the restitution he paid in Oct, 2016 and the payment is due by April 24 for the 2006 and April 30 for the other two years. WTF?? What does this mean? Has the court not released the funds to the IRS?

At the bottom of the letters it does say if you've already paid you balance in full within the past 21 days, please disregard this notice. We paid in 1-1/2 years ago, not within the last 21 days? Is this just another sign of the incompetence of our federal government and could it be that this money is just sitting there? Unbelievable?

So now, I have to deal with this bullshit, writing a letter, proving yet again that we paid the restitution, showing that I am POA, a total waste of my time.

OR, is this typical?

Any advice/suggestions are welcome.

I am inclined to send to my husband and let him just deal with by sending them a letter himself, but I really don't want to send him this stuff with his social security number on it to the prison.

What will happen if I just ignore it? He has no assets anyway, so I'm not worried that they're going to place any kind of lien on anything, and as far as his tax return that's about to be filed, he owes them, so that too there's nothing for them to take a refund from. I guess I can also let it go until he's out next January, and then those asses can just deal with reversing all the penalties and interest that accrue by their f-up. Because that's what it is I assume as this cannot be typical?

Thanks!
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Old 04-09-2018, 05:01 PM
xolady xolady is offline
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Shouldn't his attorney have a record of this? Should you even be involved as far as dealing with the IRS? Not being snide just don't want you getting into things that you aren't legally involved if that sounds right I know he's your husband and your just trying to help, maybe you should contact his attorney and find out wtf happened and why they are doing this before you get upset or involved in something that's not yours to deal with. I know when married it's hard to separate one from the other but IRS stuff should be kept separate if possible. They screw up but maybe they don't have such great records when it comes to restitution. I don't know but call his attorney.
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Old 04-09-2018, 05:08 PM
rockchalk1 rockchalk1 is offline
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Originally Posted by xolady View Post
Shouldn't his attorney have a record of this? Should you even be involved as far as dealing with the IRS? Not being snide just don't want you getting into things that you aren't legally involved if that sounds right I know he's your husband and your just trying to help, maybe you should contact his attorney and find out wtf happened and why they are doing this before you get upset or involved in something that's not yours to deal with. I know when married it's hard to separate one from the other but IRS stuff should be kept separate if possible. They screw up but maybe they don't have such great records when it comes to restitution. I don't know but call his attorney.
No, his attorney doesn't have any of the records of the restitution payments. My husband and I have them. He had to pay himself at the Federal Building and go to the court and pay it. Fortunately, my husband is so anal so we have receipts of everything and copies of everything, so having proof of payment is not the issue, it's just the bullshit of the incompetence of these agencies. It's even in his sentencing judgment that it is confirmed that he paid. So there is a crapload of documentation that it was paid. Just blows my mind once again that the left doesn't know what the right is doing. I'm not afraid of the IRS, there's nothing they can do to me/us. I don't owe them anything, he doesn't owe them anything.

As for our attorney, while he's the best at sentencing, my husband will be out of prison before I get a call back from him sad to say. Lol. No joke. I can call his civil attorney who is actually going up to see him this weekend, but I'm just so aggravated by this bs.

You know, when it rains it pours and they all come out of the woodwork?! Last week it was quiet - kids on Spring Break, dead week nothing going on, and then today, a shit-ton of stuff happening that I had to deal with and then this wonderful thing too!
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Old 04-09-2018, 05:12 PM
xolady xolady is offline
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LOL I totally understand years ago my dog did eat my husbands IRS letter only to find out that he owed from like 10 years before we were married. Just hate the IRS always have and always will!!!
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Old 04-09-2018, 06:38 PM
fbopnomore fbopnomore is offline
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Are you certain they are talking about the restitution, or the tax and penalties that accrued during the years when (I guess) he received the money he eventually paid back? When the IRS learns of someone being ordered by the court to repay money received in prior tax years, they check to see if the income was reported on their tax returns for those years. If not, they add it to the reported income, compute the new tax amount and load on civil penalties and interest to the additional tax, which can increase the amount owed significantly.

If that's what happened to you, you need to find out from a real tax professional, not a storefront tax preparer, if the restitution paid in subsequent tax years qualifies as an allowable deduction in the year(s) it was paid.

If the IRS letter is interested in the same restitution you think it is, that would be for a "refund offset" (they keep your refund) and proof of repayment would resolve that.

According to the IRS, to find out if your current 2017 tax refund is, or was flagged for offset because of the restitution, call 1-800-304-3107. If you feel your refund was reduced in error, call the IRS Taxpayer Advocate Service at 1-877-777-4778 (or visit www.irs.gov/advocate) The service is free.

If it is an offset issue, you should be able to easily resolve it. If it is additional tax, etc. because of the crime, you still have some options to reduce the amount you owe. If your 2017 tax return isn't subject to offset, you will know the letter is about underpaid taxes.
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Old 04-09-2018, 07:39 PM
rockchalk1 rockchalk1 is offline
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Originally Posted by fbopnomore View Post
Are you certain they are talking about the restitution, or the tax and penalties that accrued during the years when (I guess) he received the money he eventually paid back? When the IRS learns of someone being ordered by the court to repay money received in prior tax years, they check to see if the income was reported on their tax returns for those years. If not, they add it to the reported income, compute the new tax amount and load on civil penalties and interest to the additional tax, which can increase the amount owed significantly.

If that's what happened to you, you need to find out from a real tax professional, not a storefront tax preparer, if the restitution paid in subsequent tax years qualifies as an allowable deduction in the year(s) it was paid.

If the IRS letter is interested in the same restitution you think it is, that would be for a "refund offset" (they keep your refund) and proof of repayment would resolve that.

According to the IRS, to find out if your current 2017 tax refund is, or was flagged for offset because of the restitution, call 1-800-304-3107. If you feel your refund was reduced in error, call the IRS Taxpayer Advocate Service at 1-877-777-4778 (or visit www.irs.gov/advocate) The service is free.

If it is an offset issue, you should be able to easily resolve it. If it is additional tax, etc. because of the crime, you still have some options to reduce the amount you owe. If your 2017 tax return isn't subject to offset, you will know the letter is about underpaid taxes.
Yes, it is the restitution. To quote the letters "The amount due is based on the amount of criminal restitution you were ordered, or agreed to pay to the IRS. You must still pay the restitution payments directly to the court. The court will send us those payments and we will apply your payment aginst the amount of the criminal restitution assessment." So the bottom line is clearly it appears the stupid court probably never paid the IRS the restitution!

There is no tax and penalties on this money that has accrued or is accruing. These amounts owed have nothing to do with his personal tax returns. Personally, he owes nothing to the IRS other than what our accountant tells us we owe next week when the returns go on extension.

He isn't getting a refund from the IRS for anything from 2017, he owes, so there definitely won't be any kind of offset. We made sure not to overpay any estimates last year, just in case he had an additional fine, which he didn't. I'm getting a refund, but we don't file jointly.

He is going to write something up, and then I'll send it in with the required POA documents, all the backup and this should be done with it. At least he's not stressed about it. Just more annoyances for me he realizes. Sending stuff to the prisons just takes extra time and even though the POA stuff he left me should be sufficient, we're not taking any chances that delays things, so we want to fill out a 2848 with detailed info, but really a royal pain in the ass!
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Old 04-09-2018, 10:25 PM
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That's great news. Owing anything to our government, restitution/taxes/whatever is brutal.

I used the IRS Taxpayer advocate once when I was in prison with good results. They are the office to contact if the 800 number doesn't remove the hold on your IRS account.
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