Removal of Backup Withholding

Posted by nish on March 30, 2009, 6:49 pm

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IRS sends a taxpayer a notice that because there was a failure to pay a tax
owed on an unfiled return that the taxpayer is now on backup withholding.

Taxpayer then files the return, on which a *refund* is owed, and calls IRS
to ask for backup withholding to be removed.

IRS acknowledges that the initial letter asking for a failure to pay a tax
owed is in error, and acknowledges that a refund was due on late-filed
return. But IRS says it cannot remove backup withholding for one year
after it starts backup withholding.

Is this correct? Is there any process for removing backup withholding after
the initial situation prompting the withholding has been addressed?

nish