If you pay them, they go away. Or sometimes they pay you and go away. (My first IRS letter was after my first semester of college, which was a bit disturbing since my whole income that previous year was ~$1k, but opening it revealed that I had neglected some sort of new education credit and they were giving me a small check to account for it.) My only remaining "fear" of the IRS is the scary Audit, because I know my record keeping is terrible and I don't want the anxiety of calling places and hunting down receipts or getting sworn letters from people that such-and-such checks were used for rent sharing not income/paying for services, and so I only hope that any audit could just be resolved by paying a lump sum even if with a bunch of effort that could get reduced...
Re:IRS sends warning letters to more than 10k cryptocurrency...
by Jach on Friday July 26, 2019 @05:52PM
(#20538666)
Yeah, I've been through a similar experience, didn't file RSU income correctly one year, they thought I owed $7k or something. I could have just paid it, but the amount was large enough and the issue simple enough to be worth arguing over. Wrote back with the correct adjusted cost basis to show I already paid the taxes when I sold them (I had done this correctly in other tax returns..) and ended up getting a check from the IRS for around $100 since there were some other minor ±couple dollar irregularities in a liquidated portfolio I inherited that were in my 'favor' with a capital loss. (Odd since I used that company's online tool, so the numbers should have been identical, but who knows.)
The IRS will generally take the most effective tack it can in getting the money it is owed. For honest mistakes, that usually means sending you a formal notice that it believes you are out of compliance and requesting that you pay them. If you pay them, all is forgiven. If you can show to their satisfaction, with supporting documentation, that you don't actually owe the money, all is forgiven. (I once got a notice that I owed $11K because of some stock sales I'd forgotten to report and education credits they didn't believe I was entitled to; after producing documentation on the cost basis of these sales, a course transcript from the educational institution, and an amended tax return, the total was reduced to $50, I enclosed a check for that, and I got a notice back that the matter was closed.) If you try to pull any funny business or argue with them and your arguments are not backed up in fact, they will viciously hound you until you pay the money that you owe.