Didn't file 1099B correctly last year, got a letter
April 30, 2010 10:14 AM
About two years ago I got into the stock market. I bought and sold a few stocks, ended up losing a few hundred dollars overall. I discovered a year later that I had to file a 1099B, but I wasn't really clear on the concept and couldn't figure out how to do it online, so I didn't get it done until like half a year after I had filed my regular taxes.
I got some forms from the IRS, filled them out, and mailed them in. Didn't hear anything until today, when I got some sort of form letter in the mail from the IRS. It's LTR 3175C. You can find the text of the thing here:
http://www.ram-v-irs.com/scanned_docs/RAM-016.pdf
That one's not mine, but I got the same letter about "frivolous correspondance." Presumably sending the forms directly to them was incorrect. From what I can gather online, this doesn't seem to be any sort of serious issue, but I'd like to get the 1099Bs filed correctly. However, I don't want to get in trouble over this, and I definitely don't want to hire an attorney or anything ridiculous. I would assume I don't owe any money on this, because I had a net loss, not gain, from the stock. Can I just go down to the local IRS office, explain everything, and have them walk me through it? Should I?
I got some forms from the IRS, filled them out, and mailed them in. Didn't hear anything until today, when I got some sort of form letter in the mail from the IRS. It's LTR 3175C. You can find the text of the thing here:
http://www.ram-v-irs.com/scanned_docs/RAM-016.pdf
That one's not mine, but I got the same letter about "frivolous correspondance." Presumably sending the forms directly to them was incorrect. From what I can gather online, this doesn't seem to be any sort of serious issue, but I'd like to get the 1099Bs filed correctly. However, I don't want to get in trouble over this, and I definitely don't want to hire an attorney or anything ridiculous. I would assume I don't owe any money on this, because I had a net loss, not gain, from the stock. Can I just go down to the local IRS office, explain everything, and have them walk me through it? Should I?
Can I just go down to the local IRS office, explain everything, and have them walk me through it? Should I?
I don't have any insight into this particular issue, but for what it's worth from what I've heard the IRS is very helpful when you contact them about these kinds of things. Even people who haven't filed tax returns for years don't "get in trouble" when they contact the IRS and explain their situation, the IRS just helps them figure out how much they owe (if anything) and work with them to pay it back if necessary. I am not a lawyer, this is not tax advice, etc.
posted by burnmp3s at 10:39 AM on April 30, 2010
I don't have any insight into this particular issue, but for what it's worth from what I've heard the IRS is very helpful when you contact them about these kinds of things. Even people who haven't filed tax returns for years don't "get in trouble" when they contact the IRS and explain their situation, the IRS just helps them figure out how much they owe (if anything) and work with them to pay it back if necessary. I am not a lawyer, this is not tax advice, etc.
posted by burnmp3s at 10:39 AM on April 30, 2010
If your previous 1040s should have been amended, you should send in a 1040-X. If not, then don't do anything. The IRS probably considers the matter closed; they don't need your explanation.
posted by grouse at 10:46 AM on April 30, 2010
posted by grouse at 10:46 AM on April 30, 2010
The IRS got a 1099 from your broker that said you sold stock worth, i dunno, $5000.
They then examined your tax return, and voila, no $5000. So the IRS wants the tax on $5000, whence the letter.
If you had filled out a the proper tax form (1040C?) it would have had a place to put 'I got $5000' and also a place to put 'but I paid $6000 for that crap' ( 100s CRAP ) and you would owe no taxes.
You should call the phone number at the end of the letter and do what they tell you. If the total of your buys and sells was a loss, you will owe no additional tax.
posted by hexatron at 10:55 AM on April 30, 2010
They then examined your tax return, and voila, no $5000. So the IRS wants the tax on $5000, whence the letter.
If you had filled out a the proper tax form (1040C?) it would have had a place to put 'I got $5000' and also a place to put 'but I paid $6000 for that crap' ( 100s CRAP ) and you would owe no taxes.
You should call the phone number at the end of the letter and do what they tell you. If the total of your buys and sells was a loss, you will owe no additional tax.
posted by hexatron at 10:55 AM on April 30, 2010
Re the above advice:
I am not a lawyer.
I am not an accountant.
I do my own taxes, and have a lots of experience calling the IRS and asking 'What did I do wrong and how do I fix it?"
posted by hexatron at 11:03 AM on April 30, 2010
I am not a lawyer.
I am not an accountant.
I do my own taxes, and have a lots of experience calling the IRS and asking 'What did I do wrong and how do I fix it?"
posted by hexatron at 11:03 AM on April 30, 2010
If your previous 1040s should have been amended, you should send in a 1040-X. If not, then don't do anything. The IRS probably considers the matter closed; they don't need your explanation.
However, if your previous 1040s should have been amended, amend them.
My husband's mother, filing his taxes on his behalf, made a similar mistake in 2006. Last May, he got a letter from the government telling them he owes them $80,000, because when you sell stocks, the government assumes it's all profit--even if you sold them at a loss--unless you tell them otherwise. They actually owe him several thousand dollars, but it's been nearly a year and we've had two bank accounts emptied thanks to levies (despite being in touch with the IRS about the whole thing). I don't want to be an alarmist (and of course, IANAL/A), but this has been a pain-in-the-butt-clusterfuck for us, and I'd hate to hear that you're going through the same thing another year or two down the line.
posted by PhoBWanKenobi at 11:44 AM on April 30, 2010
However, if your previous 1040s should have been amended, amend them.
My husband's mother, filing his taxes on his behalf, made a similar mistake in 2006. Last May, he got a letter from the government telling them he owes them $80,000, because when you sell stocks, the government assumes it's all profit--even if you sold them at a loss--unless you tell them otherwise. They actually owe him several thousand dollars, but it's been nearly a year and we've had two bank accounts emptied thanks to levies (despite being in touch with the IRS about the whole thing). I don't want to be an alarmist (and of course, IANAL/A), but this has been a pain-in-the-butt-clusterfuck for us, and I'd hate to hear that you're going through the same thing another year or two down the line.
posted by PhoBWanKenobi at 11:44 AM on April 30, 2010
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posted by RichardP at 10:31 AM on April 30, 2010