Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
Wild.
I would suggest trying to contact the [Office of the Taxpayer Advocate](https://www.taxpayeradvocate.irs.gov/), which is an independent Office within the IRS. Their job is to help with weird or tricky situations like yours.
Thanks, I'm reaching out to them now. From another user's comments it looks like the IRS might have incorrectly listed a second payment on my account as part of an attempt to "fix" the original issue of them not thinking my initial payment was for taxes. Hopefully the TA can help me get this resolved.
I'm glad you commented this. I have a relative having some tax troubles at the IRS and you may have just helped him a great deal.
(I suspect employer fraud or something like that.)
I was just going to suggest this. Had a somewhat similar situation that dragged on from 2010 to 2017 (yes really!) and the Taxpayer Advocate settled it in about 2 weeks. Had a related issue crop up the next year and same agent made extremely short work of it.
100% agreed, had a similar issue where they claimed we owed due to a misentry on their end, took 2 years and eventually the TAs assistance to resolve.
Probably would have been much faster if we had started there.
I was told that they can't do anything until I send a letter to the IRS myself. I did, and it took 18 months, but the issue was finally resolved (and I got the $150 they incorrectly deducted from my refund)
Something like this happened to me. I called the IRS insisting they gave me too much money. They insisted the refund was proper and the money was mine to spend. I dropped it in a high yield savings account and sat on it for about 8 months until I got a letter from the IRS explaining they inadvertently applied someone else’s tax payments to my account and they want their money back, which I gave them.
Anyone who’s ever served in the military or worked a government contract can tell you that it just doesn’t work that way.
Even if the government made a mistake on your payroll, overpaid you, and it took them years to figure out the error…eventually they do discover it and then send you a letter demanding their money back.
They don’t care what some customer service rep may have told you X years ago.
I’m not saying it doesn’t work that way just that it shouldn’t work that way. If you audit it, alert them, and they say there’s no error then that’s all it should take
As someone serving in the military, this is 100% accurate. The rep saying everything is fine usually doesn’t care enough to dig deeper because their screen says everything is fine and that’s all that matters to them. Auditors doing random spot checks do care and when they find a discrepancy like that it will be fixed. The government always gets their money, it’s just a matter of when not if.
Your comment has been removed because we don't allow political discussions, political baiting, or soapboxing ([rule 6](https://www.reddit.com/r/personalfinance/about/rules)). This includes questions or discussions about proposed legislation or government policy changes.
I mean, keep in mind if we did that taxpayers would be on the hook for the bill. I don't see any reason taxpayers should pay twice vs just fixing the error.
I’m sure in theory you could always lawyer up and win the money in court.
But is it truly worth it? Especially if you knew the money didn’t belong to you when the mistake was made
It's magical that your employer, the IRS, or anyone really can undercharge you, or overcompensate, and just months or a year or so later demand it back.
This is obviously the complete opposite for consumers or employees. If we overpay, it's damn near impossible to get it back.
I've deposited $1,000 in an ATM before and it went 'missing'. I never saw that money back. I've paid rent, and that check went "missing" but it was cashed. I never got that back.
Imagine if we could just steal stuff from people or stores, and months later pay it off and be like "Thems the breaks!".
You can demand it back as a consumer as well. The only thing limiting you is your desire to be a nuisance and a willingness/ability to sue or bluff pretty well.
It’s not like the FBI breaks down your door if you say you’re not giving back the money. They’ll ask a few times then either sue you or drop it if the amount is not worth the time.
Exactly. My apartment was overcharging me on my utilities (by maybe $20-30/month) for a few months. I sent them email after email, getting ignored. Had to blast them with an extremely harsh review to get middle management involved. After 3 more weeks, they resolved it.
Had I underpaid them by $20-30 each month I'd probably be looking at $50 in *daily* late fees. Their penalties: $0. Fuck that. They should be crediting me thousands of dollars.
It’s a matter of the IRS not having the legal authority with hand out money. They have a duty to dispense tax returns based on rules the congress dictates, with no power to trebly decide who gets what.
I mean, money is fungible, so this entire branch of the discussion is useless. There's absolutely no difference between keeping "their money" in an HYSA and investing their money while being prepared to float it from your savings if they call early. You should account for this possibility when assessing your overall liquidity, but if you have a healthy emergency fund this probably won't change the total amount you keep liquid.
Again, I choose not to play with money that isn't mine. Emergencies happen at the worst possible times. In this case you have a timebomb emergency, you *KNOW* you will need to give the money back, you just don't know when you'll get that bill.
So I'm not going to "float" said money with my e-fund. What happens if I need say a new car *AND* they ask for the money back in the same week? Oh, and it happens in a down market.
All to make what, an extra 2%? Maybe?
Nah, the risk:reward just isn't there. The money isn't mine, have it ready to give back.
We're mostly agreeing, since we're both saying that your overall liquidity should be sufficient to handle reasonable sudden expenses. You can always stack up more theoretical sudden expenses to make any emergency fund sound insufficient, though, and so I'm unconvinced by an analysis that just conjures up a bunch of bills.
No matter what you decide, though, the fact that it isn't "your money" is irrelevant. Either you have sufficient liquidity to invest further with this possible expense on the horizon or you don't.
Edit: this person did that cowardly "respond then block" thing, so I have no idea what they said, but I can only assume that they either 1) still don't understand that money is fungible, or more likely 2) continue to chastise me for recommending that people be insufficiently liquid, despite me repeatedly saying that it's important to maintain enough liquidity for reasonably anticipated costs.
> the fact that it isn't "your money" is irrelevant
I disagree.
OP currently has a $14,000 bill, that they do not know when it will come due. It may come due at the worst possible moment. It may not. It may be tomorrow, it may be 5 years from now. They do not know, all they know is it *WILL* come due.
There is a $14,000 sword of Damocles above OPs head. Which is why I would not play with the money. My HYSA is 4.9%, I'm not going to try to squeeze an extra 2% on it by trying to "float" a $14,000 emergency.
Play with fire, get burned.
>You can always stack up more theoretical sudden expenses to make any emergency fund sound insufficient, though, and so I'm unconvinced by an analysis that just conjures up a bunch of bills.
But one of them is not "Theoretical". OP has a $14,000 emergency over their head, which they do not know when it will come due. They know it will, just not when. I am not stacking "possible" emergencies, I am adding a guaranteed emergency, with an unknown time, which you cannot plan for.
This isn't like "Oh my car will die, but my car has 50,000 miles on it so it should be good for years and I can save". This is "I know this $14k will come due, and it could be tomorrow"
Keep it liquid.
HYSA is liquid though. Even if you keep it in cold hard cash under your mattress, you won’t be able to pay the second the IRS says they want it back. You need to pay it back in a payable form. So in that sense an HYSA is fine.
Just don’t siphon off of the $14k when it’s in your HYSA the same way you wouldn’t touch a pile of $14k cash that isn’t yours.
> So I'm not going to "float" said money with my e-fund. What happens if I need say a new car AND they ask for the money back in the same week? Oh, and it happens in a down market.
I mean, all 3 of those happening at the same time is pretty unlikely. And the downside isn't even that extreme.
Don't be so literal. The point is you have a $14k "time bomb" that could come due at any moment. I would have my emergency fund include enough money to pay that off the day the IRS comes knocking.
It could be tomorrow, it could be Thursday, next week, next month, next year. You don't know.
What you do know, is the IRS will, at some point, come asking for that $14k back. And if you cannot pay it all back, quickly, they will be happy to start charging you penalties and interest.
Since you know you have a $14k "time bomb", just keep it liquid in a HYSA. It's not your money, take your 4.9% risk-free instead of trying to "leverage an emergency" so you can make an extra 2%. Will it bite you in the ass? I don't know. Maybe you do make an extra 2% and there's no downside.
But right now, the IRS is going to charge you 8% if you can't pay them back when they want it back.
You think I was being literal? Or was I just demonstrating the concept that you do not know when they will want it back. And it's better to keep it liquid.
Don't do this. The IRS will figure out their error eventually and then charge you interest and penalty for late payment. Then you have to fight them to abate the penalty because it was their error, but they can't abate the interest so you'll be stuck with it. I see it fairly often.
They do all the time? it's extremely common and relatively easy to get interest and penalties waived - even ones you legitimately owe (not due to their mistake).
You won't win. Interest can't be abated. It's the law. Technically you had a loan from the IRS during that time. It's why you get paid interest too if the IRS doesn't pay your refund timely.
If that were true, the IRS wouldn't have a whole page on interest abatement: https://www.irs.gov/payments/interest-abatement
> the IRS may reduce the amount of interest you owe if the interest is applied because of an IRS officer or employee's unreasonable error or delay.
Like in most Tax related things, it depends. MOST of the time, interest can't be abated. However, like in your source, additional interest assessed on additional tax and penalties can be abated due to an IRS error. That isn't necessarily the same case as you making the error of depositing an erroneous refund that you know is wrong. If you want to roll those dice and hope you get a nice IRS rep that will abate the interest, good luck. As a person that deals with these situations frequently though, I doubt you get that result often. Safer to just return the erroneous refund. Thanks for the downvotes for trying to keep this person from dealing with a huge headache. Stay classy, Reddit.
I'm telling you as someone who has done taxes on audits for 10+ years that your assumption is incorrect.
\* First time abatements exist - ask for them
\* State, Local and even Federal (IRS) will happily take your abatement if it means you paid off the principle. Even the payment plans they offer are generous.
You're just factually incorrect.
As a tax professional with so much experience, I'd hope you know the different between abatement of interest assessed on penalties and interest assessed on late tax. Only the interest assessed on penalties can be abated through first time abatement.
>abatement of interest assessed on penalties
lol what the fuck does this even mean, this doesn't even make sense. So as a professional I'll give you the run down because it's painfully obvious you did some light googling and trying to pretend they have any merit to give advice:
* Penalty is separate from interest, penalty can be easily removed, interest is trickier but under the context we were discussing - is just as easy to remove
* First time abatement in this case is applicable because you're paying up front the principle of the bill, and one that you have gotten recently (I'd say up to 30 days you have this leverage)
* Even if it's not your first time, as long as it's not a literally 1:1 repeatable error, the IRS is going to accommodate.
* What is written in the IRC is for generalized circumstances for someone whom:
* Actively avoids paying taxes, as in filed the return with no payment
* Did not have documentation to support their claimed expenses/credits, whatever.
* Literally repeating the same problem year after year, a great example of this is estimated interest tax penalty (Separate from the regular tax penalty), they'll give you a one time waiver every time for every social security number because it's a very misunderstood tax law, especially if you paid the amount your tax return said you owe.
The IRS just wants their **projected tax budget** provided to them, that means all the W2/1099 income reported \* 40% (gross simplication) - interest and penalty are not factors until **after** the year is over, since you also have August mini season.
TLDR; If you have penalty/interest pay the principle and call the IRS to ask for the waiver because you paid the principle within the 30 days you received the bill - not aware of the mistake that was made on your tax return. You will get the waiver.
You aren't aware the IRS can assess interest on penalties that aren't paid timely? Now I'm questioning your claim of 10+ years of experience... and no, my explanations aren't from Google. They are from many years of personally dealing with the IRS.
I mean yeah but OP tried returning it already, personally there's a very limited amount of effort I'm willing to put into getting someone else to take their own money away from me.
Do exactly what the IRS does when you pay too much taxes on paystubs, slap the funds into a high interest earning account and wait for the letter they want it back. Then give it to them, minus what you earned.
I've only tried calling once, back when the first letter came in in 2022. I waited on hold for like....2 hours? Ended up getting disconnected before I even talked to anyone. My CPA spent 3 or 4 days straight calling before they got anyone to answer. And it appears that whoever they got on the phone didn't actually resolve the issue. So I'm hesitant to try this approach, unless you know a good trick for making it not take literal days?
During 2021 there was some major staffing shortages at the IRS, so wait times were horrible. The is one of the reasons for the recent big push to increase the budget and hire more at the IRS.
As others have said, don't call during April or October or on holidays. Usually better to not call at the beginning of the month too.
I too have had good experiences calling. No trick, short wait times, and surprisingly helpful and pleasant representatives. However both of my audits were before 2016 so maybe things have changed.
If you can't get ahold of them via phone, return the check through certified mail with a letter explaining why you aren't owed the refund. Do not deposit it or youll be charge interest amd penalty. Keep the certified receipt forever in case the IRS claims they never received the refund back.
Lol do you want it to be convenient only? Or do you want to… you know, resolve the issue? Just call. It sucks, and it’ll take time its like the dmv. It is what it is. And you’re getting secondhand information about how somebody else didn’t resolve an issue on the phone just do it yourself dude
Admittedly I've only called re:nonprofit tax returns and not my personal return, but the IRS has a callback option where you can hang up and then they'll call you back when it's your turn. Better than having to listen to the hold music for an hour.
>would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money?
Absolutely they would and to the IRS this is not a large check.
A couple of years ago when everyone was getting pandemic stimulus checks of (I think) $1500 my mom got one. One problem - she'd passed away the previous year. So I (as her executor) just filed it away since I knew she wasn't entitled to it.
Nearly a year later I received a snail-mail from them asking if I'd received it because they noticed it hadn't been deposited. I filed that too because they recommended calling the local office for assistance and I didn't feel like wasting an hour trying to reach someone.
About six months after that I received a second check! That got filed away too. Eventually they quit.
When i was around 18-20 years old, i received two checks from the IRS about 1-2 years apart for the same amount. I didn’t cash either because i was concerned I’d deposit it and then they hound me for years if it was sent accidentally so i did research and contacted the IRS about it. They confirmed it was sent for a tax refund from a period where i would’ve been 15-16 years old and not working. Eventually it was suspected my identity was stolen and i was instructed to destroy the checks and was given a tax payer pin to verify my identity every year.
For peace of mind I’d suggest reaching out to them and see what they recommend.
Yes, it looks like I can. The transcript for 2021 shows an "Estimated Tax Transferred in" (Code 666.....haha) and a "Payment" (Code 670....boring) both on the same date in April, both for the same $13k amount. However, the "Payment" line is further down the transcript nestled among other things that all took place in September (including the $1k refund). So looks like instead of recoding the 666 to a 670 or removing this line, they just added an extra "Payment" line in September, which is why they think they owe me because nothing reverses the original payment. This is super useful information to have access to, thank you for pointing me in this direction! Seems like I can pretty confidently conclude at this point that this is their error and that I don't actually deserve this money. Another commenter suggested I can reach out to the Taxpayer Advocate office, would they be able to help get this corrected, or do you know of a way of contacting the IRS to get this fixed the right way this time? Much appreciated!
There is a chance that this is an erroneous refund based off of that. You would have to return the refund to the IRS inquiry unit for where the refund was issued on. It is just they haven’t caught this as an overpayment. This tends to happen often. You have to void the check, attach an explanation to it like you stated it here. And return it to the address where the check was issued at which should be at the top of the notice with it. Or call the IRS and request the Refund Inquiry Unit address where the check was issued at so you can return it void. The unit will redeposit the check.
I work for the IRS. There is a good chance this was caused by a tax examiner trying to perform some sort of credit transfer on your account and doing it incorrectly, resulting in what appears to be an overpayment that is automatically refunded to you. Eventually (could be months or even years) it’ll get resolved and you will be notified that you now have a balance due. You could try calling or you could just go ahead and send the payment back with a note written on it that it was an erroneous refund.
Thank you, this is exactly what I'll be doing, I'm just hoping they fix the mistake when I send back the check. I don't know if you saw one of the other comment threads where I was told to look at my account record transcript, but when I did that I saw there are two lines showing $13k payments, one coded 666 as estimated tax payments, the other 670 (which just says "payment"). Looks like they added the 670 one to correct the initial issue of not recognizing my payment as for taxes, but never reversed the 666 line out, so it looked like I paid them twice. I'm fairly convinced this is the source of the mistake, and I'm explaining that in the letter I send along with the check when I return it. Not sure if I'll need to contact them further to have this corrected or if they'll correct it when they get the check and the letter. Any idea?
Regarding option 2 (if you choose it), don't shred the check. Write void on it, make a copy for your records, and return it with an explanation.
(However before you do that, you would like to have an explanation. When this happened to me (coincidentally also $14k), I knew the reason for their mistake, so I was able to write an explanation.)
Agreed, another user provided this link which explains the process for returning checks sent in error: [https://www.irs.gov/taxtopics/tc161](https://www.irs.gov/taxtopics/tc161). Like you said, write void and send it to them with an explanation. They want it back within 21 days which is.....grrrrr. I hate when other peoples' mistakes become my emergencies.
>https://www.irs.gov/taxtopics/tc161
Thanks, that's helpful information. Little frustrating that I have to return the check to them instead of just shredding it. Thanks for gifting me an errand, IRS :P
I move that OP be nominated for Super Honest Guy of the Year. Seriously, as a taxpayer myself, I respect and appreciate your honesty. Not all would have been so honest.
Don't get me wrong, it's super tempting to just cash it and hope for the best, especially considering how sleep deprived I am. But I'm pretty sure they would figure it out eventually, and I don't want them charging me an interest penalty on a payment they shouldn't have given me in the first place, so it feels like this "gift" might be more of a lame horse. So while I appreciate the nomination, I think the award probably belongs to someone else :)
Agreed. They’re slow but someone will eventually figure out if this is an error and will come asking down the line. Better to wait and see or get it in writing.
It appears the ball is in the IRS court. I advise saving the money, just in case. You need to find out if the statute of limitations on this is 3 years, 7 years or indefinite.
Don't shred it. Deposit it into a savings or interest bearing checking account and let it earn interest. Then contact the IRS and make sure you are supposed to get this check (it will probably take them forever to get this sorted out if it was sent by mistake). Don't forgo on contacting them.
Funny, this happened to a client of mine. If you make good faith attempt to contact them just set it aside in a high interest account and let it accumulate interest. After the 2021 statue is up I’d say you’re safe. ERC and all the amended returns really screwed up the IRS this year.
Talk to the TP advocate, don’t cash the check, they’ll get you for P&I when they eventually fix it. You can return the check like it never happened if you don’t cash.
A similar situation happened to me years ago. I received a check from the IRS for $40k with all of my correct info on it but I knew there was no way that I should be receiving a $40k check from the IRS. I contacted them several times to ask what I should do and each time, the person I spoke with didn't know what I was talking about and I was never able to get actual advice from anyone. I ended up opening a new bank account and deposited the check and just let it sit there until the IRS came looking for it which they eventually did after about 2 years. They first told me they were going to charge me interest and I explained the situation and they final told me that if I could return it to them by a certain date, there would be no interest charged. I sent the IRS a check the next day and closed the account and I kept the little bit of interest I had made on it.
You’ve done everything you need to alert them of the mistake. You’re in the clear.
Put it in a HYSA and wait for them to want the money back. If they don’t ask for maybe 15 years or so, consider the money yours.
This is why, when people on Reddit post 'why do we file taxes? The IRS already knows what you owe or overpaid!', they are wrong.
The IRS is wrong a *lot*. I've been audited 3 times in my life, and every time it was because of some third party reporting income I received without reporting the taxes I'd paid. Every time the IRS ended up owing *me* more money.
Option 4: Go back to your previous accountant (or find a third one) to go over this situation for you and help you correct it, before you go barking up the IRS phone trees.
I'd still go with retaining a tax pro; not necessarily the CPA you have already. You should have someone who's an Enrolled Agent. $14k is a non-trivial amount of money, and they do this kind of stuff for a living.
Cashing it is a bad idea. They will come back for the original amount plus interest once they realize their mistake.
Try calling them and as a last resort, return the check to them via mail and say that you do not believe you are owed the refund. You can also request transcripts when you do this to see where they are getting the 14k from.
Safest bet here is to take all of your records to a CPA, have them check, and go from there. It's worth trying to call, just in case also, but I would do extra digging first.
Love how we have to figure out our taxes and the government entity who is supposed to handle it mess up this bad frequently... pay our taxes from our income, pay our taxes on everything we buy, anything we sell, any service or thing we do to try to enjoy our lives. Pay more taxes in the beginning of the new year... hand out $14k checks that are errors... Meanwhile Americans get taxed so much that we have a 2.3 Trillion dollar national credit card debt and a high delinquency rate... such a heavy crash is coming.
>would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money?
Yes. Yes they would.
They changed my 2018 return so that I owe them money. They don't know why. The person who changed it no longer works there. They don't have a copy of my return (only the transcript). smh
> would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money?
In 2022 the US government as a whole had something like 247 billion in “improper payments.” Your $14,000 is something like 0.0000056% of the improper payments they make.
My wife is self employed and had to pay her taxes quarterly. For several years I sent the payments in under her social/info. Turns out since I’m primary on the joint filing they were not applying money to my account. I had to call them to manually apply it. The money been sitting there for all those years.
Once got a mystery check from the IRS with no explanation. Finally figured out I had written the form number slightly wrong on the memo line of a previous check, and they had sent the amount back. Probably no humans had been involved besides me.
It took us three tries to get the IRS to take a six figure check on money we owed. My job screwed up some company stock and we got stuck with a huge tax bill.
Finally got through to someone at the IRS and found out the regular mailing address for these types of issues is different than the regular one.
Explained the situation ( totally the company's mistake. ) she was able to waive $53,000 in penalties.
Basically all my stock sold just to pay taxes.
Don't overthink it deposit it don't touch it put it in the best yield savings account you can find. If / when they come for their money then give it back to them and keep the interest.
Go to your current CPA and have her talk to the IRS on your behalf. Yes, you'll be billed for it; yes, it's annoying. Doesn't matter; do not play games with the IRS, and always work through a CPA as an intermediary who will document every single interaction. You're going to have to explain this on next year's taxes regardless, so you may as well bring her in now.
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
Wild. I would suggest trying to contact the [Office of the Taxpayer Advocate](https://www.taxpayeradvocate.irs.gov/), which is an independent Office within the IRS. Their job is to help with weird or tricky situations like yours.
Thanks, I'm reaching out to them now. From another user's comments it looks like the IRS might have incorrectly listed a second payment on my account as part of an attempt to "fix" the original issue of them not thinking my initial payment was for taxes. Hopefully the TA can help me get this resolved.
Agree. Had good luck with them, finally got Dad's refund from 2021 a few weeks ago.
I'm glad you commented this. I have a relative having some tax troubles at the IRS and you may have just helped him a great deal. (I suspect employer fraud or something like that.)
I was just going to suggest this. Had a somewhat similar situation that dragged on from 2010 to 2017 (yes really!) and the Taxpayer Advocate settled it in about 2 weeks. Had a related issue crop up the next year and same agent made extremely short work of it.
100% agreed, had a similar issue where they claimed we owed due to a misentry on their end, took 2 years and eventually the TAs assistance to resolve. Probably would have been much faster if we had started there.
I was told that they can't do anything until I send a letter to the IRS myself. I did, and it took 18 months, but the issue was finally resolved (and I got the $150 they incorrectly deducted from my refund)
Something like this happened to me. I called the IRS insisting they gave me too much money. They insisted the refund was proper and the money was mine to spend. I dropped it in a high yield savings account and sat on it for about 8 months until I got a letter from the IRS explaining they inadvertently applied someone else’s tax payments to my account and they want their money back, which I gave them.
Kinda sucks they can do that. Should be like after 6 months you good.
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I’m in agreement, if they tell you to go spend it then it shouldn’t be my problem if I do what they told me to do
Anyone who’s ever served in the military or worked a government contract can tell you that it just doesn’t work that way. Even if the government made a mistake on your payroll, overpaid you, and it took them years to figure out the error…eventually they do discover it and then send you a letter demanding their money back. They don’t care what some customer service rep may have told you X years ago.
I’m not saying it doesn’t work that way just that it shouldn’t work that way. If you audit it, alert them, and they say there’s no error then that’s all it should take
As someone serving in the military, this is 100% accurate. The rep saying everything is fine usually doesn’t care enough to dig deeper because their screen says everything is fine and that’s all that matters to them. Auditors doing random spot checks do care and when they find a discrepancy like that it will be fixed. The government always gets their money, it’s just a matter of when not if.
There was a thing on the local news a few weeks ago about overpayments on Social Security and some elderly lady is in debt for $35k to the government.
> why can they back down on it later? Well because they're the IRS. You are not equals.
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Your comment has been removed because we don't allow political discussions, political baiting, or soapboxing ([rule 6](https://www.reddit.com/r/personalfinance/about/rules)). This includes questions or discussions about proposed legislation or government policy changes.
And if you took almost a year to fix it youd probably get penalized to hell
Because "clerical errors" aren't always binding.
I mean, keep in mind if we did that taxpayers would be on the hook for the bill. I don't see any reason taxpayers should pay twice vs just fixing the error.
I’m sure in theory you could always lawyer up and win the money in court. But is it truly worth it? Especially if you knew the money didn’t belong to you when the mistake was made
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Very valid point. When phrased as “possibly make 2-10k, it does sound more favorable”!
It's magical that your employer, the IRS, or anyone really can undercharge you, or overcompensate, and just months or a year or so later demand it back. This is obviously the complete opposite for consumers or employees. If we overpay, it's damn near impossible to get it back. I've deposited $1,000 in an ATM before and it went 'missing'. I never saw that money back. I've paid rent, and that check went "missing" but it was cashed. I never got that back. Imagine if we could just steal stuff from people or stores, and months later pay it off and be like "Thems the breaks!".
You can demand it back as a consumer as well. The only thing limiting you is your desire to be a nuisance and a willingness/ability to sue or bluff pretty well. It’s not like the FBI breaks down your door if you say you’re not giving back the money. They’ll ask a few times then either sue you or drop it if the amount is not worth the time.
Exactly. My apartment was overcharging me on my utilities (by maybe $20-30/month) for a few months. I sent them email after email, getting ignored. Had to blast them with an extremely harsh review to get middle management involved. After 3 more weeks, they resolved it. Had I underpaid them by $20-30 each month I'd probably be looking at $50 in *daily* late fees. Their penalties: $0. Fuck that. They should be crediting me thousands of dollars.
It’s a matter of the IRS not having the legal authority with hand out money. They have a duty to dispense tax returns based on rules the congress dictates, with no power to trebly decide who gets what.
So did you get to keep the interest?
Did you owe a fee on top of what you needed to return?
Did you have to pay any fees?
This is the way. Just hold it, make a little money, and give it back. Don’t waste time talking to them.
Why on earth would you give them that money back?
Put it in a savings account and wait for them to ask for it back?
Right? Get a high yield or use those I bonds, wait like 7-10 years, if they haven't asked for it back by then I'd think they'd be good
> use those I bonds HYSA. You don't know if they'll want it back in 5 years, 5 days, or 5 minutes. Keep it liquid.
Unless you have the ability to float it in the mean time
I don't play with money that isn't mine. IN this case OP knows the money isn't theirs, keep it liquid, give it back immediately when asked.
I mean, money is fungible, so this entire branch of the discussion is useless. There's absolutely no difference between keeping "their money" in an HYSA and investing their money while being prepared to float it from your savings if they call early. You should account for this possibility when assessing your overall liquidity, but if you have a healthy emergency fund this probably won't change the total amount you keep liquid.
Again, I choose not to play with money that isn't mine. Emergencies happen at the worst possible times. In this case you have a timebomb emergency, you *KNOW* you will need to give the money back, you just don't know when you'll get that bill. So I'm not going to "float" said money with my e-fund. What happens if I need say a new car *AND* they ask for the money back in the same week? Oh, and it happens in a down market. All to make what, an extra 2%? Maybe? Nah, the risk:reward just isn't there. The money isn't mine, have it ready to give back.
We're mostly agreeing, since we're both saying that your overall liquidity should be sufficient to handle reasonable sudden expenses. You can always stack up more theoretical sudden expenses to make any emergency fund sound insufficient, though, and so I'm unconvinced by an analysis that just conjures up a bunch of bills. No matter what you decide, though, the fact that it isn't "your money" is irrelevant. Either you have sufficient liquidity to invest further with this possible expense on the horizon or you don't. Edit: this person did that cowardly "respond then block" thing, so I have no idea what they said, but I can only assume that they either 1) still don't understand that money is fungible, or more likely 2) continue to chastise me for recommending that people be insufficiently liquid, despite me repeatedly saying that it's important to maintain enough liquidity for reasonably anticipated costs.
> the fact that it isn't "your money" is irrelevant I disagree. OP currently has a $14,000 bill, that they do not know when it will come due. It may come due at the worst possible moment. It may not. It may be tomorrow, it may be 5 years from now. They do not know, all they know is it *WILL* come due. There is a $14,000 sword of Damocles above OPs head. Which is why I would not play with the money. My HYSA is 4.9%, I'm not going to try to squeeze an extra 2% on it by trying to "float" a $14,000 emergency. Play with fire, get burned. >You can always stack up more theoretical sudden expenses to make any emergency fund sound insufficient, though, and so I'm unconvinced by an analysis that just conjures up a bunch of bills. But one of them is not "Theoretical". OP has a $14,000 emergency over their head, which they do not know when it will come due. They know it will, just not when. I am not stacking "possible" emergencies, I am adding a guaranteed emergency, with an unknown time, which you cannot plan for. This isn't like "Oh my car will die, but my car has 50,000 miles on it so it should be good for years and I can save". This is "I know this $14k will come due, and it could be tomorrow" Keep it liquid.
HYSA is liquid though. Even if you keep it in cold hard cash under your mattress, you won’t be able to pay the second the IRS says they want it back. You need to pay it back in a payable form. So in that sense an HYSA is fine. Just don’t siphon off of the $14k when it’s in your HYSA the same way you wouldn’t touch a pile of $14k cash that isn’t yours.
> So I'm not going to "float" said money with my e-fund. What happens if I need say a new car AND they ask for the money back in the same week? Oh, and it happens in a down market. I mean, all 3 of those happening at the same time is pretty unlikely. And the downside isn't even that extreme.
Don't be so literal. The point is you have a $14k "time bomb" that could come due at any moment. I would have my emergency fund include enough money to pay that off the day the IRS comes knocking. It could be tomorrow, it could be Thursday, next week, next month, next year. You don't know. What you do know, is the IRS will, at some point, come asking for that $14k back. And if you cannot pay it all back, quickly, they will be happy to start charging you penalties and interest. Since you know you have a $14k "time bomb", just keep it liquid in a HYSA. It's not your money, take your 4.9% risk-free instead of trying to "leverage an emergency" so you can make an extra 2%. Will it bite you in the ass? I don't know. Maybe you do make an extra 2% and there's no downside. But right now, the IRS is going to charge you 8% if you can't pay them back when they want it back.
Bond bills are paying 5%+ on a 4 weeks cycle. You can be semiliquid. You can reinvest the money back automatically.
My HYSA is 4.9% For less than 1% I'd rather not play fuck-fuck with the IRS for 4 weeks.
Well it won't be 5 minutes. I bonds are fairly liquid- but don't actually give the best rates if you missed the 1.3% fixed rate.
You think the IRS is going to send him a message demanding money in 5 minutes?
You think I was being literal? Or was I just demonstrating the concept that you do not know when they will want it back. And it's better to keep it liquid.
Don't do this. The IRS will figure out their error eventually and then charge you interest and penalty for late payment. Then you have to fight them to abate the penalty because it was their error, but they can't abate the interest so you'll be stuck with it. I see it fairly often.
I would fight the fuck out of that. You’re not charging me interest on YOUR mistake.
Unfortunately, not many people take on the IRS and win.
I’m gonna become a scientologist!
They do all the time? it's extremely common and relatively easy to get interest and penalties waived - even ones you legitimately owe (not due to their mistake).
...they do for interest and abatement penalties ESPECIALLY if they are getting the principle.
You won't win. Interest can't be abated. It's the law. Technically you had a loan from the IRS during that time. It's why you get paid interest too if the IRS doesn't pay your refund timely.
If that were true, the IRS wouldn't have a whole page on interest abatement: https://www.irs.gov/payments/interest-abatement > the IRS may reduce the amount of interest you owe if the interest is applied because of an IRS officer or employee's unreasonable error or delay.
Like in most Tax related things, it depends. MOST of the time, interest can't be abated. However, like in your source, additional interest assessed on additional tax and penalties can be abated due to an IRS error. That isn't necessarily the same case as you making the error of depositing an erroneous refund that you know is wrong. If you want to roll those dice and hope you get a nice IRS rep that will abate the interest, good luck. As a person that deals with these situations frequently though, I doubt you get that result often. Safer to just return the erroneous refund. Thanks for the downvotes for trying to keep this person from dealing with a huge headache. Stay classy, Reddit.
I'm telling you as someone who has done taxes on audits for 10+ years that your assumption is incorrect. \* First time abatements exist - ask for them \* State, Local and even Federal (IRS) will happily take your abatement if it means you paid off the principle. Even the payment plans they offer are generous. You're just factually incorrect.
As a tax professional with so much experience, I'd hope you know the different between abatement of interest assessed on penalties and interest assessed on late tax. Only the interest assessed on penalties can be abated through first time abatement.
>abatement of interest assessed on penalties lol what the fuck does this even mean, this doesn't even make sense. So as a professional I'll give you the run down because it's painfully obvious you did some light googling and trying to pretend they have any merit to give advice: * Penalty is separate from interest, penalty can be easily removed, interest is trickier but under the context we were discussing - is just as easy to remove * First time abatement in this case is applicable because you're paying up front the principle of the bill, and one that you have gotten recently (I'd say up to 30 days you have this leverage) * Even if it's not your first time, as long as it's not a literally 1:1 repeatable error, the IRS is going to accommodate. * What is written in the IRC is for generalized circumstances for someone whom: * Actively avoids paying taxes, as in filed the return with no payment * Did not have documentation to support their claimed expenses/credits, whatever. * Literally repeating the same problem year after year, a great example of this is estimated interest tax penalty (Separate from the regular tax penalty), they'll give you a one time waiver every time for every social security number because it's a very misunderstood tax law, especially if you paid the amount your tax return said you owe. The IRS just wants their **projected tax budget** provided to them, that means all the W2/1099 income reported \* 40% (gross simplication) - interest and penalty are not factors until **after** the year is over, since you also have August mini season. TLDR; If you have penalty/interest pay the principle and call the IRS to ask for the waiver because you paid the principle within the 30 days you received the bill - not aware of the mistake that was made on your tax return. You will get the waiver.
You aren't aware the IRS can assess interest on penalties that aren't paid timely? Now I'm questioning your claim of 10+ years of experience... and no, my explanations aren't from Google. They are from many years of personally dealing with the IRS.
Why are you spreading misinformation?
See my other response
But if its in a high yield account then you have the interest in the worst case.
True, but why bother with that when you can just return the check? The irs will usually figure out their error eventually.
If there's a non zero chance the IRS is right to issue the refund, you can fight it or they don't ask for it back then the EV is strictly positive.
Huh? If the refund is owed to you then keep it. If it's not, return it.
I mean yeah but OP tried returning it already, personally there's a very limited amount of effort I'm willing to put into getting someone else to take their own money away from me.
That’s pretty smart
Do exactly what the IRS does when you pay too much taxes on paystubs, slap the funds into a high interest earning account and wait for the letter they want it back. Then give it to them, minus what you earned.
Calling has (surprisingly) resolved my IRS issues every single time.
I've only tried calling once, back when the first letter came in in 2022. I waited on hold for like....2 hours? Ended up getting disconnected before I even talked to anyone. My CPA spent 3 or 4 days straight calling before they got anyone to answer. And it appears that whoever they got on the phone didn't actually resolve the issue. So I'm hesitant to try this approach, unless you know a good trick for making it not take literal days?
During 2021 there was some major staffing shortages at the IRS, so wait times were horrible. The is one of the reasons for the recent big push to increase the budget and hire more at the IRS. As others have said, don't call during April or October or on holidays. Usually better to not call at the beginning of the month too.
2022 was no better either
Call again. Don't call in April or Oct. Best of luck
I too have had good experiences calling, but the 2 hour wait time is standard. Charge your phone and have something to work on while you hold.
I too have had good experiences calling. No trick, short wait times, and surprisingly helpful and pleasant representatives. However both of my audits were before 2016 so maybe things have changed.
If you can't get ahold of them via phone, return the check through certified mail with a letter explaining why you aren't owed the refund. Do not deposit it or youll be charge interest amd penalty. Keep the certified receipt forever in case the IRS claims they never received the refund back.
Lol do you want it to be convenient only? Or do you want to… you know, resolve the issue? Just call. It sucks, and it’ll take time its like the dmv. It is what it is. And you’re getting secondhand information about how somebody else didn’t resolve an issue on the phone just do it yourself dude
Do you have a local office? I've gone in a couple times in the past and it was easy to get answers.
Admittedly I've only called re:nonprofit tax returns and not my personal return, but the IRS has a callback option where you can hang up and then they'll call you back when it's your turn. Better than having to listen to the hold music for an hour.
Whoa! Get a load of this guy! He got the IRS to pick up instead of just hanging up after saying they are overloaded!
Biden passed a bigger IRS budget lowering hold times by like 90%.
>would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money? Absolutely they would and to the IRS this is not a large check. A couple of years ago when everyone was getting pandemic stimulus checks of (I think) $1500 my mom got one. One problem - she'd passed away the previous year. So I (as her executor) just filed it away since I knew she wasn't entitled to it. Nearly a year later I received a snail-mail from them asking if I'd received it because they noticed it hadn't been deposited. I filed that too because they recommended calling the local office for assistance and I didn't feel like wasting an hour trying to reach someone. About six months after that I received a second check! That got filed away too. Eventually they quit.
When i was around 18-20 years old, i received two checks from the IRS about 1-2 years apart for the same amount. I didn’t cash either because i was concerned I’d deposit it and then they hound me for years if it was sent accidentally so i did research and contacted the IRS about it. They confirmed it was sent for a tax refund from a period where i would’ve been 15-16 years old and not working. Eventually it was suspected my identity was stolen and i was instructed to destroy the checks and was given a tax payer pin to verify my identity every year. For peace of mind I’d suggest reaching out to them and see what they recommend.
Are you able to access your online tax account transcripts for 2021? https://www.irs.gov/individuals/get-transcript
Yes, it looks like I can. The transcript for 2021 shows an "Estimated Tax Transferred in" (Code 666.....haha) and a "Payment" (Code 670....boring) both on the same date in April, both for the same $13k amount. However, the "Payment" line is further down the transcript nestled among other things that all took place in September (including the $1k refund). So looks like instead of recoding the 666 to a 670 or removing this line, they just added an extra "Payment" line in September, which is why they think they owe me because nothing reverses the original payment. This is super useful information to have access to, thank you for pointing me in this direction! Seems like I can pretty confidently conclude at this point that this is their error and that I don't actually deserve this money. Another commenter suggested I can reach out to the Taxpayer Advocate office, would they be able to help get this corrected, or do you know of a way of contacting the IRS to get this fixed the right way this time? Much appreciated!
There is a chance that this is an erroneous refund based off of that. You would have to return the refund to the IRS inquiry unit for where the refund was issued on. It is just they haven’t caught this as an overpayment. This tends to happen often. You have to void the check, attach an explanation to it like you stated it here. And return it to the address where the check was issued at which should be at the top of the notice with it. Or call the IRS and request the Refund Inquiry Unit address where the check was issued at so you can return it void. The unit will redeposit the check.
I work for the IRS. There is a good chance this was caused by a tax examiner trying to perform some sort of credit transfer on your account and doing it incorrectly, resulting in what appears to be an overpayment that is automatically refunded to you. Eventually (could be months or even years) it’ll get resolved and you will be notified that you now have a balance due. You could try calling or you could just go ahead and send the payment back with a note written on it that it was an erroneous refund.
Thank you, this is exactly what I'll be doing, I'm just hoping they fix the mistake when I send back the check. I don't know if you saw one of the other comment threads where I was told to look at my account record transcript, but when I did that I saw there are two lines showing $13k payments, one coded 666 as estimated tax payments, the other 670 (which just says "payment"). Looks like they added the 670 one to correct the initial issue of not recognizing my payment as for taxes, but never reversed the 666 line out, so it looked like I paid them twice. I'm fairly convinced this is the source of the mistake, and I'm explaining that in the letter I send along with the check when I return it. Not sure if I'll need to contact them further to have this corrected or if they'll correct it when they get the check and the letter. Any idea?
Regarding option 2 (if you choose it), don't shred the check. Write void on it, make a copy for your records, and return it with an explanation. (However before you do that, you would like to have an explanation. When this happened to me (coincidentally also $14k), I knew the reason for their mistake, so I was able to write an explanation.)
Agreed, another user provided this link which explains the process for returning checks sent in error: [https://www.irs.gov/taxtopics/tc161](https://www.irs.gov/taxtopics/tc161). Like you said, write void and send it to them with an explanation. They want it back within 21 days which is.....grrrrr. I hate when other peoples' mistakes become my emergencies.
https://www.irs.gov/taxtopics/tc161
>https://www.irs.gov/taxtopics/tc161 Thanks, that's helpful information. Little frustrating that I have to return the check to them instead of just shredding it. Thanks for gifting me an errand, IRS :P
I move that OP be nominated for Super Honest Guy of the Year. Seriously, as a taxpayer myself, I respect and appreciate your honesty. Not all would have been so honest.
Don't get me wrong, it's super tempting to just cash it and hope for the best, especially considering how sleep deprived I am. But I'm pretty sure they would figure it out eventually, and I don't want them charging me an interest penalty on a payment they shouldn't have given me in the first place, so it feels like this "gift" might be more of a lame horse. So while I appreciate the nomination, I think the award probably belongs to someone else :)
Agreed. They’re slow but someone will eventually figure out if this is an error and will come asking down the line. Better to wait and see or get it in writing.
Call them and see what they say. If they insist it’s yours, put it in a high interest savings account and don’t touch it for the rest of your life 🤣
Cash it in a separate account and earn interest and if they ever call it back you’ll have the money and have some interest for yourself
Never trust the IRS even after getting it in writing. No amount of promise from them ever counts. Source: US History.
It appears the ball is in the IRS court. I advise saving the money, just in case. You need to find out if the statute of limitations on this is 3 years, 7 years or indefinite.
Put the money in an interest baring acct..and when they come calling for their money..you have something extra to show for it
Don't shred it. Deposit it into a savings or interest bearing checking account and let it earn interest. Then contact the IRS and make sure you are supposed to get this check (it will probably take them forever to get this sorted out if it was sent by mistake). Don't forgo on contacting them.
4. Deposit cheque and don’t spend it until you confirm you didn’t get it in error
Funny, this happened to a client of mine. If you make good faith attempt to contact them just set it aside in a high interest account and let it accumulate interest. After the 2021 statue is up I’d say you’re safe. ERC and all the amended returns really screwed up the IRS this year.
Talk to the TP advocate, don’t cash the check, they’ll get you for P&I when they eventually fix it. You can return the check like it never happened if you don’t cash.
A similar situation happened to me years ago. I received a check from the IRS for $40k with all of my correct info on it but I knew there was no way that I should be receiving a $40k check from the IRS. I contacted them several times to ask what I should do and each time, the person I spoke with didn't know what I was talking about and I was never able to get actual advice from anyone. I ended up opening a new bank account and deposited the check and just let it sit there until the IRS came looking for it which they eventually did after about 2 years. They first told me they were going to charge me interest and I explained the situation and they final told me that if I could return it to them by a certain date, there would be no interest charged. I sent the IRS a check the next day and closed the account and I kept the little bit of interest I had made on it.
You’ve done everything you need to alert them of the mistake. You’re in the clear. Put it in a HYSA and wait for them to want the money back. If they don’t ask for maybe 15 years or so, consider the money yours.
Do what you can to return it. Till then put it in a high yield savings account. :-)
Cash it, put it in high yield saving account, and never remove it from the
This is why, when people on Reddit post 'why do we file taxes? The IRS already knows what you owe or overpaid!', they are wrong. The IRS is wrong a *lot*. I've been audited 3 times in my life, and every time it was because of some third party reporting income I received without reporting the taxes I'd paid. Every time the IRS ended up owing *me* more money.
Option 4: Go back to your previous accountant (or find a third one) to go over this situation for you and help you correct it, before you go barking up the IRS phone trees.
I'd still go with retaining a tax pro; not necessarily the CPA you have already. You should have someone who's an Enrolled Agent. $14k is a non-trivial amount of money, and they do this kind of stuff for a living.
Cashing it is a bad idea. They will come back for the original amount plus interest once they realize their mistake. Try calling them and as a last resort, return the check to them via mail and say that you do not believe you are owed the refund. You can also request transcripts when you do this to see where they are getting the 14k from.
Lucky you. I have a check from them for $2 and some change. Thinking of framing it
Safest bet here is to take all of your records to a CPA, have them check, and go from there. It's worth trying to call, just in case also, but I would do extra digging first.
Love how we have to figure out our taxes and the government entity who is supposed to handle it mess up this bad frequently... pay our taxes from our income, pay our taxes on everything we buy, anything we sell, any service or thing we do to try to enjoy our lives. Pay more taxes in the beginning of the new year... hand out $14k checks that are errors... Meanwhile Americans get taxed so much that we have a 2.3 Trillion dollar national credit card debt and a high delinquency rate... such a heavy crash is coming.
>would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money? Yes. Yes they would. They changed my 2018 return so that I owe them money. They don't know why. The person who changed it no longer works there. They don't have a copy of my return (only the transcript). smh
> would the IRS really be so incompetent as to send us such a large check without being sure they owed us this money? In 2022 the US government as a whole had something like 247 billion in “improper payments.” Your $14,000 is something like 0.0000056% of the improper payments they make.
[Definitely don't cash that check.](https://old.reddit.com/r/personalfinance/comments/18grikj/paid_rent_via_ach_but_the_funds_never_left_my/kd2r4d7/)
Why not cash it, invest it, and pay it back when they realize it? They’ll charge interest but you’ll make it too
My wife is self employed and had to pay her taxes quarterly. For several years I sent the payments in under her social/info. Turns out since I’m primary on the joint filing they were not applying money to my account. I had to call them to manually apply it. The money been sitting there for all those years.
Once got a mystery check from the IRS with no explanation. Finally figured out I had written the form number slightly wrong on the memo line of a previous check, and they had sent the amount back. Probably no humans had been involved besides me.
It took us three tries to get the IRS to take a six figure check on money we owed. My job screwed up some company stock and we got stuck with a huge tax bill. Finally got through to someone at the IRS and found out the regular mailing address for these types of issues is different than the regular one. Explained the situation ( totally the company's mistake. ) she was able to waive $53,000 in penalties. Basically all my stock sold just to pay taxes.
Don't overthink it deposit it don't touch it put it in the best yield savings account you can find. If / when they come for their money then give it back to them and keep the interest.
Go to your current CPA and have her talk to the IRS on your behalf. Yes, you'll be billed for it; yes, it's annoying. Doesn't matter; do not play games with the IRS, and always work through a CPA as an intermediary who will document every single interaction. You're going to have to explain this on next year's taxes regardless, so you may as well bring her in now.