Vic Dura wrote:
- quote -

True, I may wind up with her of course; after all, she gave
me a free, excellent ball point pen a couple of years ago,
so her office number is always available.. However my point
is that IRS should have some valid and well laid out
procedures in place for dealing with the situation.

ChEAr$,
Harlan Lunsford

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Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:

- quote -

How about the local TaxPayer Advocate office? I've had good
experience with them.

--
To reply to me directly, remove the XXX characters from my
email address.

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glrep wrote:

- quote -

Further to my reply above.

The official position by IRS is that taxpayer , i.e. your
client, should include the penalty along with the 1040 and
then send in a letter (with the return) requesting
abatement. But in my experience, quoted above, and the
experience of many other tax pros across the country who are
members of our national association, too many times, if not
most, the IRS processors disregard the letter along with the
return.

Well, if you think about it, these who process paper tax
returns are not paid much more than minimum wage anyway, so
you can understand.

this of course means that our only remedy is to follow up.

But there SHOULD be a better way. And IRS should be aware
that there IS a definite problem here.

One way to do it, and understand please, I can't advocate
this, is to simply prepare the tax return with the form 5329
attached, but with the amount on the appropriate line on
page 2 of 1040 a big fat ZERO, with letter attached
outlining the reasons for not including the amount of the
50% penalty. At least that would put IRS on notice of the
initial disagreement.

comment from other pros please?

ChEAr$$$$,
Harlan Lunsford, EA n LA]
13 Apr 2005
ONLY two days more!

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glrep wrote:

- quote -

Oh BOY! Do I know what you mean.

My client, for whom I recommend a certain local broker, is
in same condition. Or maybe I posted something abut this
earlier.

Anyway, for 2003, same situation, broker had a list, but her
name was off the bottom of the list, and got "truncated" if
you know computer jargon. So she didn't get notified, no
RMD was made, so last year "we" corrected the situation,
BUT she had to pay the 50% excise tax with her 2003 return.

Did IRS even notice the nice letter I wrote for her? Of
course they didn't! So, now, a year later, and after April
15th when I get time, I'll again write to IRS outlining the
facts, begging forgiveness for the broker's "fault", and my
client's "inattentiveness", and hope for a response. But I
WILL follow it up. After all, IRS does say, if there is
reasonable cause, the 50% penalty MAY be abated.

Keep your fingers crossed, and work with the CPA to do
everything possible to get this money back for your client.

ChEAr$$$$,
Harlan Lunsford, EA n LA]
13 Apr 2005
ONLY two days more!

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I have been reading all the postings requarding missed
RMD's. I am a broker, I sent the proper notification to my
client for his RMD, as in the past years, he responded
promptly, we discussed the distribution and I faxed it to my
back office. We are a small firm and our fax machine makes
no record of faxes being sent, but my tracking list that I
keep indicates that I did so. Unfortunately I failed to
check and see that the distribution actually went out (I
will never do that again), my back office has advised me
they never received it. My client when doing his taxes
called to ask about the distribution, we immediately made
the proper distribution. I feel this is my responsibility
and I will pay the penalty ($4,500 approximately), he is
feeling very bad about it, but I do insist on paying the
penalty, while I have never had this problem before, it was
foolish of me to never have checked to be sure the
distribution had been paid out. We will of course file the
proper forms through his CPA and explain the situation in
the hopes that the penalty will be waived. My problem is,
after reading all of your responses, I'm concerned that the
IRS may take the position that the client also had a
responsibility to be sure the payment was taken and not have
any sympathy, however, despite the clients responsibility, I
will be the one to pay the fine and I feel that my honest
mistake should be taken into consideration. I should
mention that the client is struggling with some memory loss.
Any input on the best way to present this to the IRS would
be appreciated.

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Harlan Lunsford wrote:
- quote -

Harlan,
I just successfully retrieved a penalty from 2003. It only
took 10 months. I suggest you call the Practicioner
Priority Service for further instructions.

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Harlan Lunsford wrote:
- quote -

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"gr54" <gr54[at]aemail4u.com (at) (dot)> wrote:

- quote -

I think you may be being a bit too hard on this broker. The
RMD can come out of any IRA account so the broker has no way
of knowing if you had or had not taken it from an IRA
somewhere else. By this I mean if your RMD from IRA 1 is
$4,600 and from IRA 2 is $1,200 then you can pull $5,800
from IRA 2 and you are ok.

- quote -

Good luck!

--
Drew Edmundson, CPA (NC)

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gr54 wrote:

- quote -

Of all the brokers I've ever known, I've never met one who
knew anything about taxes or RMDs, at least not to the point
that they'd think of each of their clients in December and
check to see if they'd taken RMDs then call them to see if
they actually took their RMDs from some other account. And
they did send you a notice saying you needed to take your
RMD - you just didn't read it carefully enough.

Phoebe

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Thanks to all who have replied so far. I will seek out a
CPA I know who did my taxes in years past when they were
much too complicated for me to do...

Some more specifics for you:

On 12/8/2003 I received my first check from this broker out
of my IRA account. My assumption was that this would be an
automatic withdrawal every year afterward. Turns out not.
I found a letter sent by them in January 2004, just a month
later, asking me to contact them regarding IRA. Included in
the letter were the figures for the RMD for year 2004. I
failed to notice the part about contacting them and filed
this letter in my folder for 2004 taxes, again assuming
(with the financial figures included) that the amount they
had calculated would be the amount of the check they would
send (presumably in December of 2004). What with Christmas
and other hectics of life in December, I failed to even
notice no check was sent UNTIL I opened my 2004 taxes folder
(a few days ago) and looked at the letter.

Granted, I accept responsibility for missing this. However,
a good broker would have noticed in December that no RMD had
been taken. A good broker would have either sent notice (or
called) that an RMD must be taken or report consequences of
not doing so. These guys will probably no longer be my
broker. Lesson learned...never assume your broker is as
competent as you think they might be.

Wish me luck in my battle with IRS...and thanks again for
the replies.

Gary

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gr54 (at dot) wrote:

- quote -

In your request for penalty refund, tell them how you have
promptly complied with all regulations in the past, and how
this one slipped by you (or the custodian). You must have
taken fast action to correct the mistake. Tell them about
your corrective action, and how you will take two
distributions from this account in 2005. I would send this
request one month after filing your return and start
telephone calls if no response after 10 weeks. It took six
months for success for one of my customers.

Don in Colorado

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Harlan Lunsford wrote:
- quote -

Harlan,
what about filing a 1040X with another copy of the letter?
REckon that would work?

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Feb 2005

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Drew Edmundson wrote:
- quote -


- quote -

While I can sympathize and understand your comments, Drew,
there are some possibilities, even for the clueless.

Just above I responded to Barry Picker mentioning my bone of
contention with IRS re a client. Seems that these days,
trustees/custodians, are required by IRS and the code to
annually inform their over 70 1/2 clients not only as to
FMV, but also as to the RMD. My client was supposed to
be notified, but her broker confessed that her name had been
left off the list furnished him by his national
headquarters.

Maybe somebody else can also chime in here with suggestions
of just how to follow up on a "disregarded" letter.

ChEAr$,
Harlan Lunsford, EA n LA

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Barry Picker wrote:
- quote -

Hmmm. well now. Have you got a specific address to send
such returns with letter of pleading to? Or just take pot
luck with your nearby service center?

I've one case now, in which "they" did nothing about her
letter which was sent with her 1040 last year. And I
haven't a clue as to how to go about checking on it. Would
appreciate any suggestions.

ChEAr$,
Harlan Lunsford, EA n LA

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:
- quote -

Barry has more experience in this area than I do so you
should keep that in mind. I have only had a few of these
situations.

--
Drew Edmundson

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gr54" <gr54[at]aemail4u.com (at) (dot)> wrote:

- quote -

When during the year is the distribution normally made? How
could you not notice during 2004 that the 2004 distribution
had not been made?

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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David Woods, EA, ChFC, CLU wrote:
- quote -

For this penalty you really don't need to hire anyone.
As one poster pointed out, they're pretty reasonable and
understanding, provided you're not blatant.

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"gr54" <gr54[at]aemail4u.com at dot> wrote:

- quote -

And? It's not a new law, nor is it hidden. In fact it's
quite clear and visible. It's also there for a reason.

- quote -

You already touched on it. Hire someone experienced in
fighting penalties.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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gr54 wrote:

- quote -

YOu won't like this maybe, but ultimately, you are
responsible for making sure you take the required
distributions annually.

On the other hand, IRS DOES require them to notify you of
what your rmd is based on last year's 12/31 balance.

Very very true, however, that it's an uphill battle to
obtain a rebate of the 50% penalty.

ChEAr$,
Harlan Lunsford, EA n LA
Thu 10 Feb 2005

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"gr54" <gr54[at]aemail4u.com (at) (dot)> wrote:

- quote -

Don't blame the IRS, Congress made the penalty 50%.

I haven't had much luck getting IRS to refund this penalty
but my clients, like you, didn't have a really good excuse
(death in family, hurricane, etc.) In effect you are saying
you forgot, please forgive me. The IRS might forgive it if
you can show you requested the distribution, the broker
failed to make it, then you fixed it immediately. I am
guessing this isn't the case.

Sorry.

--
Drew Edmundson

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