Donna,
I assume your client is just trying to avoid the early withdrawal penalty?
The IRS has been pulling the trigger fast lately in issuing deficiency notices, in some cases, I’ve heard, even before the time to submit additional documentation has passed, because they know that they collect a lot of money from TP’s who just send in the check out of fear. As others have said, you have to be admitted to practice before the Tax Court in order to complete a petition for your client, but the process isn’t too involved, and your client can probably do it. After the petition is filed, the TC will send it back to Appeals, where you could then get it resolved assuming you have a POA on file. Make sure it’s worth it to your client for you to get involved in order to avoid the $2000 early withdrawal penalty. I assume the tax on the 20k has already been paid.
John Stevens, EA
Stevens Tax & Accounting, Inc., dba Equi-Tax
651-773-5000
FAX 651-457-4529
equitax@unique-software.com
www.equitax.net
From:
Sent: 11/10/2008 2:11 PM
To:
Subject: [taxchat] Petition Tax Court
A client of mine received a Notice of Deficiency back in Aug 15, 2008. She took $20,000 from an IRA and used it to pay for tuition for her 2 children. For some reason, they never received the 5329 with code 8 -Exemption for Higher Education costs. Can't figure out why, because I efiled her return.
When we got the Notice of Deficiency, I responded with a letter, a POA, copies of the 5329, and copies of the kids tuition statements showing the fees. For the son, we had $9424 of fees from one semester. My client didn't get me the second semester's fees. We sent copies of both semester's feese for the daughters school account fees.
Today I received another letter from the IRS with form 886-A Explanation of Items where they are still disallowing the 10% penalty because they said we didn't provide all the necessary documentation.
Part of the problem was that they picked up 2005 payment amounts, not 2006.
Now they say in their letter "Your time to petition the
I have the client calling the schools again to get more complete printouts showing receipts for tuition/fees. But this deadline is in 3 days! I have never had to petition the Tax Ccourt and I'm not sure I even need to.
Can anyone offer me some advice here how to proceed with this? Do I download a form from the Tax Court and file it? Do I even need to? I would appreciate some quick guidance.
thank you in advance,
Donna
Donna J. Perrone, EA
203-469-4939
203-468-2038 fax
IRS Circular 230 Disclosure: Unless expressly stated otherwise, any tax advice contained herein, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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