Home |IRS Tax Return | What steps can I take to resolve the issue of the IRS claiming I owe them $5k due to an amended tax return for 2020 that incorrectly shows I made $10k more than I actually did, and my attempts to get the correct W-2 from my employer have been unsuccessful, causing delays in my tax return for this year and financial hardship?

What steps can I take to resolve the issue of the IRS claiming I owe them $5k due to an amended tax return for 2020 that incorrectly shows I made $10k more than I actually did, and my attempts to get the correct W-2 from my employer have been unsuccessful, causing delays in my tax return for this year and financial hardship?

Robert James, 20+ years of experience in IRS matters
Answered on September 16,2023

See if you can get help from a Low Income Taxpayer Clinic:

Low Income Taxpayer Clinics (LITC)

It sounds like the notice you received was a CP2000 for unreported income. The IRS computer runs a program looking for unreported income on filed tax returns and you'll get this notice first, which is a proposal. It takes a few months before they actually assess the additional taxes.

If you forgot to include a W-2 or 1099 or something, sometimes the IRS proposal is correct. But sometimes it's not correct, and this is how people find out that someone else used their SSN at a job. Or sometimes an employer accidentally files two copies of a W-2 and doesn't correct one of them.

You should get your 2020 Wage and Income transcript and see where the extra $10k income is from:

Get Your Tax Record

It might be from your employer, or the additional income could be from something else.

If the balance due does show up in your online IRS account then your 2022 refund will probably be offset towards that balance due. The only way to avoid this is to see if you qualify for an Offset Bypass Refund (OBR) - this requires that you contact Taxpayer Advocate Service before the refund is processed, and you need documentation of some financial hardship like utility bills past due and in danger of being shut off, or you're in danger of getting evicted, etc.

Tax Payer Advocate Series

Usually you need to contact Taxpayer Advocate Service before you file a tax return to get approved for OBR because of the timing issues, so I'm not sure if it's too late for your 2022 return. If you can, call Tuesday right at 7am. When you get to the phone prompt to enter your SSN don't enter anything - that sometimes gets you to a person faster.

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