Comments on: IRS Error in Your Favor

By: Got an unexpected refund TWICE!

Got an unexpected refund TWICE! — Thu, 08 Sep 2011 04:55:19 +0000

I received an unexpected refund for $500 about 3 months ago and spent about an hour on the phone with the IRS (including long hold time) to find out that they had (most likely) neglected to credit my account as having made my first installment for my First Time Homebuyers Credit I received in 2008. The repayment is spread out over 15 years ($500 each year for 15 years starting with the 2010 tax year) So I sent the check back along with a letter explaining that they needed to keep the money and make sure that my account shows I made that payment on time. They sent a letter back to me a while later saying that they had credited my account, and sorry for the inconvenience. Now, just about two weeks ago I received another check, this time for $500 plus interest I am having a really hard time not just cashing the darn thing. I’ve spent 5 hours total on the phone with them dealing with their screw up, 2 1/2 hours just today, and was cut off once and had to start over! I suppose anyone can make a mistake, and to be honest, I was a lot more understanding before I realized how painful it would be to try and give them their money back. No one seems to know what is triggering this and I keep wondering how many other people they’re sending free money to. I don’t think our government can afford that at the moment.

By: San

San — Tue, 03 May 2011 06:36:33 +0000

OK, sounds all to familiar. Received a tax refund from FTB for over $700. I sent in a pymt for $3,000 check bounced called them immediately. FTB rep said will note my file and to send in what I could as initial payment so I sent in $1,000 by EFT then I receive my refund check? So confused I know it’s not right but I’m keeping it & hoping they don’t figure it out.

By: Kay

Kay — Wed, 09 Dec 2009 06:12:27 +0000

well I have something to try and unravel. last year i was claimed as a dependent by my boyfriend, so I filed, did not claim myself, included my tax payment check, and assumed it was done. Later I received a check for X amount in the mail from the IRS saying they had recalculated and I was being sent the check. Now, a year later I get a letter saying “I can’t claim myself if someone else claimed me as a dependent.” I went and looked at my copy of the 1040 and I clearly didn’t claim myself or use the standard deduction. So they must have changed it. Now I am told I need to amend. Amend what? Their mistake???

By: dwayne

dwayne — Mon, 04 Aug 2008 16:23:03 +0000

they put 271 in my account in may, then in july, put another 271 in my account. Turned around, and took both back out. No warning, no notice. I wouldn’t have figured it out unless they did it the second time. Called my bank and they said they made two mistakes and were correcting them. Funny thing is, the first one was done right after my tax deposit. 1 day apart. I’m thinking they adjusted it and found they owed me more money.

By: Bob

Bob — Wed, 18 Apr 2007 02:27:59 +0000

in jan i got a letter from the irs i owed them 365 dollars for taxes in 2003 i paid them in good faith in march i got a letter and a check for 3054 dollars for over payment in 2005 i made the misstake of thinking they found 1 mistake so they were checking all my returns then in april recieved a letter they made a misstake and i owe them 3054 plus int and penalties i called them told them im on ss and i have no problem paying them back but it will be over time but it was there misstake i don’t agree i should have to pay int or penalites —

By: Kay

Kay — Mon, 24 Apr 2006 05:25:36 +0000

Got your message. I saw how our great minds were working alike and I just mentioned it in my post (http://dontmesswithtaxes.typep....._whee.html) about the Carnival.

By: Jeremy

Jeremy — Fri, 21 Apr 2006 20:22:58 +0000

Int George makes a good point about the physical check v. direct deposit. Perhaps one way to address that is to ask the IRS for a confirmation in writing. I don’t know if they’d do it, but it certainly wouldn’t hurt to ask.

Whether they provided the confirmation in writing or not, I would keep the money ready to return to the IRS once they found their error.

By: Blog Mike

Blog Mike — Fri, 21 Apr 2006 05:15:23 +0000

I checked my bank account balance today and noticed an extra $3,000 in it. I have no idea how this money got there. It looks like it has been there since 4/18. They will probably ask for it back, so I wonâ€™t be spending it. Ethically I would feel bad, even if it was their fault. Just as with the IRS, if they donâ€™t catch it soon, I will let them know.

By: Independent George

Independent George — Thu, 20 Apr 2006 19:20:21 +0000

Be very careful here: a lot really depends on whether you received a physical check, or a direct deposit. The taxpayer is absolutely obligated to report errors in their favor to the IRS, and a refund that large certainly qualifies. Penalties and interest are often waived in situations where good-faith efforts at compliance can be demonstrated; behave too dodgily, though, and expect to pay penalties up the wazoo.

So, if you get a physical check, don’t deposit it, no matter how tempted you are. You have to report the error to te IRS no matter what, and depositing a check you knew you didn’t deserve is likely to be interpreted as fraud.

An electronic deposit, on the other hand, is an entirely different story. In that case, I’d still call the IRS to inform them of the error (meanwhile documenting the call), but also transfer it to my HSBC account on the same day if they insist they’re right. I’d also follow up with regular letters (keeping a copy in my files) after that. Since have extensive documentation on your attempts to return the money right, you can demonstrate that there was no attempt to defraud. In that case, you should be able to safely collect another $80/month or so in additional interest while the gears of government slowly turn.

By: Inchoate Random Abstractions

Inchoate Random Abstractions — Thu, 20 Apr 2006 18:58:57 +0000

I agree with mapgirl. And personally, I would’ve sent them a certified letter, rather than calling them on the phone. You’d want to be able to prove that you made a good faith effort to correct the error, just in case the IRS decided to come after. I could just see them blaming that poor woman and charging her interest for the time that she held onto the erroneous refund.

By: Amanda

Amanda — Thu, 20 Apr 2006 16:15:15 +0000

Yea – I wouldn’t mess with the IRS. I would inform them, but keep it in a high-yield account until they asked for it back to at least benefit off some interest! It is their bad, afterall!

By: mapgirl

mapgirl — Thu, 20 Apr 2006 15:18:01 +0000

They say ethics are the things you do when no one is looking.

I would have called. It’s not fun to be on the hook to the IRS.

By: Dus10

Dus10 — Thu, 20 Apr 2006 15:00:40 +0000

Absolutely. The bank is making money off of that mistake, no matter which case. I am going to try an get a share of the interest…

By: Anonymous

Anonymous — Thu, 20 Apr 2006 14:49:05 +0000

I have to agree with Blaine. I’d move the money to an interest bearing account, notify the IRS in writing and then leave the next step up to them.

By: Blaine Moore

Blaine Moore — Thu, 20 Apr 2006 14:20:57 +0000

I’d give it back; the money wouldn’t be mine. Until they took it back, though, it would sit in a high interest savings account…

By: Steve

Steve — Thu, 20 Apr 2006 14:17:35 +0000

This same thing happened to mee in January this year. I had to do an ammended return due to an error on my 2004 taxes. It turned out I owed the IRS $1600. I sent in my check. About a month later I received a refund for $3,200. Apparently they messed up when processing my ammended return and decresed my tax by 1600 rather than increasing it, which resulted in the refund for double of the amount I sent in.

Lets just say on the first call I made to them, they kept telling me that I deserved the refund based on my paperwork. I kept fighting and then asked for a supervisor, only then did they realize what happened and that they made an error (apparently they think that never happens). When I look back on it, I should have just kept it, but I feel better knowing that the IRS will not come knocking on my door someday asking for the money.