Blog
WE ARE NOW PREPARING 2019 INDIVIDUAL AND CORPORATE TAX RETURNS
565 West Adams Street, Suite 600, Chicago, IL 60661
Youtube WeChat Facebook Twitter
Search
The Tax Practice of IIT Chicago-Kent College of Law
The Tax Practice of IIT Chicago-Kent College of Law

312-906-5041

Talk to a lawyer now.

Subscribe to this list via RSS Blog posts tagged in tax liability

Posted on in IRS

Chicago tax attorney IRSLate this past Friday afternoon, I received a disturbing telephone call from a long-time client. There were two IRS Revenue Officers at his home, wanting to talk to him about his delinquent tax liabilities.

I was incensed. Why was I not contacted? I have a valid power of attorney on file, and had not previously been contacted by these officers, or anyone else from the IRS regarding this.

I insisted on speaking with one of the agents, who was relatively cordial (according to my client, his menacing attitude changed dramatically after he told him he was calling his lawyer). The Revenue Officer’s explanation? I needed to update my power of attorney, “to cover through 2020 or 2025.” What?

I happen to know that this client had no unpaid tax liability for the most recent filed year. That was, simply put, some hot bullcrap.

Earlier last week, I was myself visited by two Revenue Officers at my office regarding a client – completely unannounced, drop-in. I spoke to them briefly, and strongly suggested that next time they should make an appointment with me, and I would be more than happy to discuss these matters with them for as long as they needed my attention. That’s my job.

...

overpaid, overpayment of taxes, Chicago Tax AttorneysOn our website and blog, we’ve discussed extensively the various scenarios for underpayment of taxes, tax audits, tax court litigation, etc. But what happens when you pay too much in taxes? This happens a lot more than most people recognize, and consequently, many taxpayers do not realize their overpayment until it’s too late.

Won’t the IRS Just Refund My Overpaid Taxes?

Like most dealings with the IRS, the answer to this question is…it depends. The key is if the IRS is aware of the overpayment. For example, if you file a tax return that shows you owing $1000 and you accidentally mail in a check for $1500, the IRS will probably (though there is no guarantee) catch the mistake and refund you the $500 overage. The far more common scenario, however, is an overpayment that the IRS is not aware of. Common examples that fall into this category include failure to claim a credit or deduction you are entitled to (such as the Earned Income Tax Credit or home mortgage deduction) or in the case of a business filer who was entitled to carry a net operating loss from a prior year. There are also cases in which a taxpayer overpays as a result of an audit examination.

Filing a Claim for Refund

In the vast majority of cases, there are two ways to file a refund claim when you overpay your taxes.  In many instances, you may be able to file an amended return for the tax year in question to correct the error and claim your overpayment. The other method is to file Form 843 Claim for Refund and Request for Abatement. When filing this form, it is important to clearly state the specific reason(s) for the refund claim. In certain limited circumstances, you may also choose to file an "informal" Claim for Refund – this is just a letter to the IRS claiming an overpayment of a particular amount for a specific reason. This method is seldom used, and you should only choose this option with the assistance of a skilled tax attorney. Whatever method you select to claim your refund for overpaid taxes, it is best to take action sooner rather than later; unless there are extenuating circumstances, the statute of limitations for filing a refund claim is within three years of the date of filing the return or two years of the date the overpayment was made, whichever is later.  Its actually a bit more complicated than just that, though, because you can only claim an overpayment of monies that were paid within the prior two years.  One more thing to be careful of is filing a claim for an excessive or unjustified amount. Because of the high number of frivolous claims, Congress has given the IRS the authority to levy a penalty equal to 20% of the amount of the claim.

...

innocent spouse, tax law, Chicago Tax AttorneyYour ex-husband, either accidentally or deliberately, failed to report income and the IRS caught it.  Now, you have a letter demanding that you owe the Service several thousand dollars in tax, penalties and interest, even though you had no income of your own that year and have since divorced the bum.  Is there any relief for spouses who had nothing to do with the issue that has now blown into a full-fledged tax controversy?  Perhaps.

Joint-and-Several Liability

When you file a joint tax return with your spouse, each one of you is "jointly and severally" liable for any understatement or underpayment of tax in connection with that return.  This means that each taxpayer is responsible for paying the

When you file a joint tax return with your spouse, each one of you is "jointly and severally" liable for any understatement or underpayment of tax in connection with that return.  This means that each taxpayer is responsible for paying the entire tax debt (though the IRS cannot collect more than the total amount of the liability).  Even if you had nothing to do with the preparation of the tax return, with the omission of the income or the overstated deduction, or even with the IRS audit, both you and your spouse are on the hook for the whole thing.

Innocent Spouse Relief

...
Back to Top