IRS Keeps Refunds

Today TaxMama hears from Lupe in Florida, who tells us. “My sister has not received her tax refund in 2 years. The IRS now owes her $5,000. She has placed many calls to the IRS and continues to get the run around.
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She was finally referred to theTaxpayers Advocate by the IRS. She spoke with the Tax Advocate, and yesterday she received a letter in the mail from the Advocate’s office stating she needs to prove that she is experiencing a hardship before they will help her. What does she need to do?”

Dear Lupe,

Have your sister re-read that letter carefully. She doesn’t need to prove she’s experiencing a severe hardship.

What she does have to prove is that IRS has been unresponsive to her situation for more than 30 days or that she hasn’t receive a response or resolution by the date that was promised.,,id=97395,00.html

What she should do, is this. Write up a summary about the dates and times she has contacted IRS for help – with a brief outline of what was discussed and what was promised by IRS in each instance.

Frankly, though, I don’t know if your sister really understands what’s happening to her account.

If IRS has been grabbing her refunds for several years, it’s quite likely that she has an unpaid
balance due from some earlier tax year.

If she is sure that she has paid all her taxes, there are four things to look into.

1) Was she married, and is that a tax debt of her ex-husband that was created while they were married? If so, she may be able to resolve the problem by using the innocent spouse
provisions provided by IRS.

2) IRS sent her a notice correcting a tax return because she left something off – and she never responded to IRS to correct it.

3) IRS sent her an invitation to an audit and she never went.

4) Is someone else using her Social Security Number and running up taxes without her knowledge?

IRS should have been able to look at her account and tell her the year(s) of the outstanding balance they are collecting. And they should be able to tell her the source of the tax (tax return, audit, etc.
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Perhaps, even before going back to the Taxpayers Advocate’s office, you could get on the phone with your sister when she calls IRS one last time – ask those two questions:

1) For what year(s) do you show an outstanding balance?
2) What is the source of the tax balance?

With more information, your sister might recognize the source of the problem and be able to start work towards correcting it. Or she might become certain this is an IRS error – and the Advocate
will be able to help her.

Regardless, please sit with her on one call to IRS and help her get the facts. Remember to get the name and employee number of the person you talk to.

And remember, you’ll find answers to questions about IRS problems and all kinds of tax issues, free. Where? Where else? At

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