A new day may be dawning.  Or not.

Most of you know that I work with a slew of folks and companies to help them pay the lowest amount of taxes required by law. No cheating, no subterfuge- just availing themselves of all the laws that afford folks to pay their taxes- but only the amount they owe, not some number that is afforded by plugging in numbers to TurboTax, H&R Block, TaxAct, etc.

I study the tax laws every year. (As a matter of fact, right now I am attending a 3 day tax conference.) Those little changes that are snuck into Highway Bills, Health Care bills, wherever. Because I need to know what can and can’t be done. That also means studying how the IRS examines tax filings, how they respond to audits, etc.

And, every once in a while, I get a client who is in real trouble. Some of them knew they were digging holes to China, knew they were playing ostrich, but a lot of them have been bamboozled by “tax preparers”. And, that’s one of the stories I will be telling today.

About three years ago, D&N came to me with a problem. They went to an advisor that was recommended to them, one who supposedly understood the tax and income issues that applied to their case. As it was, they were mighty late submitting these taxes (D&N were overseas employees). And, paid some $500 or so to get their complicated tax situation handled by this advisor.

But, then they got a surprise. A really big one.

Their tax preparer, Karena Ybarra, had sent these folks a copy of their  tax forms. And, Ybarra implied that these were the taxes that she filed on their behalf. (Yes, that does give away part of the story.) And, D&N had been pretty pleased that they didn’t owe a fortune to the Feds like they thought they would. (They don’t pay state taxes; they live in one of the five that don’t assess taxes on their citizenry.) Amazingly, they were pleased to see they would be getting a $ 59 refund.

Until they got a check in the mail from the IRS. For $ 11609.46. Thankfully, they realized something was really wrong. They called Ms. Ybarra who didn’t give them an answer they liked. And, then, D&N asked around- to a bunch of different folks- who told them they needed to speak to me. FAST.

Which they did. I requested they provide me a power of attorney so I could rummage around in the IRS database to see what might be going on. And, I found that the Ybarra submission to the IRS was vastly different from what D&N provided me as their copies. (I believed them, since Ybarra had handwritten notes on the form and it was clearly marked as their “copy” to save.)

I immediately filed an amended tax return. One that changed the data from what Ybarra sent to the IRS without telling my new clients to that information on the forms they had in their possession. And, I told them to mail back the check they got from the IRS with this amended tax return.

But, the more I thought about it, the more I wondered if that was the smartest solution. So, I called D&N and asked them to send me all their original tax data for 2012. (They had submitted the tax return in 2014.) I asked them a slew of questions about their lives and the tax year in question.

And, then I told them they were in a heap of trouble. Because not only had Ybarra submitted a false return to the IRS (one that differed from the one that D&N thought she did), but the one they had in their possession was as closely related to the truth as a fairy tale is to our daily lives.

I notified D&M they should send in a check for $ 13,800 to the IRS- fast. (That was separate from the IRS refund that they already mailed back in.) That may have been a little high, but there were going to be penalties and interest added to the bill, so they may actually owe a little more.

(Actually, they provided us the funds; we mailed the check in on their behalf. Hopefully, it would mean that the IRS would not attack their personal account with a vengeance, leaving them no funds one day without any notice because of this fraud.)

I prepared yet another amended tax return. One with a full and complete letter explaining the whole situation to the IRS. How things ended up where they were. And, that the IRS needed to take action against Ybarra.

(It turns out that this last suggestion wasn’t really necessary. There already were legal proceedings against Ms. Ybarra and her various companies. Because she had bilked the US out of at least $ 26 million with her fraudulent filings. Yes, folks, that was MILLIONS!)

Now, you would have thought this would have put the issue to bed for D&N. But, it didn’t. Partly because the IRS was absolutely positive that D&N were criminals just like their tax preparer. Partly because we submitted two separate amended tax returns.

The IRS kept hassling my clients for more money- for taxes, for penalties, for interest. The case dragged on. With D&N getting those ubiquitous IRS letters telling them things were complicated and the IRS was going to take another 30 days to get back to them. For a total of 22 months. (Amazingly, we taxpayers have no right to tell the IRS that it will take us a little more time to answer their demands. Only the IRS feels arrogant enough to take forever- while they demand our fully documented replies in 20 days or less. Or they’ll place liens on our houses and our other assets.)

Well, you guessed it. That’s exactly what the IRS did- after that 22 month delay. They placed liens and assessed penalties on D&N. Finally, about a month ago, they told me they gave up. They’re tired of having their credit ruined and getting hassled. They would pay the IRS another $ 8700 just to be done with it.

I asked them if I could write one more letter on their behalf. They agreed; but they told me they were paying the IRS anyway.

Why did I want to write one more letter? Because when I was meandering yet again through the IRS files, it looked pretty obvious to me that the IRS never processed the second amended tax return. Oh, sure, the Director of Examinations (yes, it went that high) read it and asked for clarifications. But, that data never once found its way to the “permanent record” for D&N. Which meant to me that all the hassling and fines and penalties were all resulting from the IRS disregarding the proper tax return and continually referring to the IRS return that D&N thought was submitted.

So, I wrote to the Director of Examinations on 29 July. And, sent the same letter to the Commissioner of the IRS. Admittedly, it wasn’t the most pleasant of letters. Basically, I demanded that the IRS apologize to my clients. Sure, they mistakenly chose a criminal tax advisor. (They didn’t know she was a criminal then, either.) They’ve been doing everything right since. (Not just for 2012; but I’ve handled all their tax submissions since that one.)

Around 6 PM on the 11th of August, D&N got a phone call. One purportedly from the IRS. Having learned from me that the IRS doesn’t really make phone calls, D&N were unbelieving. The IRS agent kept insisting it was real; all she needed was the last four of the relevant social security number. D&N refused. But, wisely, D&N asked if this really was the IRS they would know who did their taxes the first time and whose been their advocate since.

D&N were floored when the IRS executive rattled off the information. So, they provided the SSN. And were regaled with an apology. The IRS was extremely sorry that they handled their case so badly. And, D&N would be receiving all their extra money back- with interest- shortly. And, to let them know their actions would now lead to the IRS changing how they dealt with certain situations.

Not surprisingly, D&N called me early Friday morning. To thank me profusely for my efforts. To tell me the story of their phone call. And, for believing that the IRS would change its behavior.

Oh. I, too, got a phone call (from a blocked number). The IRS had to try four times, since I was already being harassed by those sort of criminals who have been calling my (blocked) number repeatedly. They wanted me to know that my detailing (not on the letter you see here) the entire process, the agents involved, etc. would make it possible to make the IRS more responsive to taxpayers.

From their mouths to G-d’s ears. Not just for D&N, but for all of us taxpayers.

Ah, such a naive fellow I am.  On 22 August, the IRS sent them yet another letter demanding $1100 in penalties and interest.  My letter response to the IRS this time could only be called scalding if one were charitable.

I, for one, was not.