$500,000 Tax Error

  1. russ_watters

    Staff: Mentor

    So I got a letter from the IRS this past week. I figured it was about a little penalty for being slow with my estimated taxes or something (I'm kinda self-employed, so I pay quarterly taxes....sometimes). Instead, it was about my 2004 taxes. There was a discrepancy, they said, between the income I reported and the 1099s they received from "my" clients. There were about a dozen of them, totalling just under half a million dollars.

    I reinstalled TurboTax 2004, pulled up my return, and quickly found the problem: there is a box that says something like 'Employee Identification Number, if any'. I entered my boss's EIN, not realizing that the box was for my EIN (which I don't have). So now the IRS thinks *I* own Progressive Engineering, and didn't report that half a million in income that they are questioning me about.

    Its a pretty simple error (and may exist on my 2005 return - I'll have to check that too), but we'll see if the IRS can straighten it out easily...
  2. jcsd
  3. arildno

    arildno 11,265
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    So you misread "Employee" as "Employer"?
    Oh dear..

    Anyway, since you can provide IRS with a crystal clear explanation of the discrepancy, it shouldn't be any problems.
    At least, that's how it works over here.

    I hope everything turns out well.
  4. Ivan Seeking

    Ivan Seeking 12,122
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    I would keep a minimum of money in checking or savings until this is straightened out. They can and will come and take your all of your money.

    I once went to them and let them know that I had made a mistake and owed them money. We worked out a simple payment plan and everything was dandy until all of my checks started bouncing. The IRS had taken all of the money in my checking account without any notice or warning.
    Last edited: Jul 16, 2006
  5. chroot

    chroot 10,351
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    I would hire an excellent accountant.. pronto.

    - Warren
  6. Perhaps you should flee to a tropical island with no extradition treaties?
  7. Hmm, a smart way of finding out how much your boss makes :wink:
  8. Chi Meson

    Chi Meson 1,767
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    But he doesn't REALLY have that half mil!
  9. Integral

    Integral 7,288
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    Do you suppose that they will let you have a internet connection in your cell?
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