Reply To: Sent in OIC

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#36806
Tammy Coalson
Participant

We have sent in the notarized statement. Now IRS has contacted me and is asking for more information. The client and his wife, no dependents, live in a small rural community in TN. In 2018, Total SE income is $34,230 (2018 year) not minus expenses of $1,947 + HO of $900 (2018 year) and this does not include the quarterly estimated tax payments of $1600 and the retirement taken out, see later in this message. Total living expenses each month is $3,755 using the figures allowed & actually paid. They purchased a vehicle (13 Dodge Challenger) in January, 2018 that they are paying $500 per month on, but because they did not get rid of the old vehicles, a 93 Jeep purchased in April, 2017 with 200k miles, an 85 Dodge P/U they have had a long time and has a blown engine, an 08 Dodge Charger with 200k miles, they are saying that they won’t consider the money paid on the vehicle purchased in 2018 and they should have repaired the ones they already have instead. They cashed out a retirement account in 2018 from a W2 job that TP had left in 2015 in the amount of $12,845. When I asked them what they spent it on, they stated to catch up on bills, pay down payment on vehicle bought in 2018 ($4500) and help pay for their daughter’s wedding ($2500). The IRS is stating they have already allowed for expenses not including this retirement and consider this to be dissipated income and that TP & Spouse are double dipping. The IRS is now asking for a statement from 2 prior jobs with retirements accounts that are showing up that the balances on these retirement accounts are $0.

What advice to say to IRS? I know the figures do not actually compute, but these people are poor, cannot afford to pay the $52,932.48 to IRS that goes from 2003-2017.