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Posted by John H. Fisher on August 29, 2007, 1:31 am
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>>> I received a letter from my State informing me that I owed
>>> $2540.62 in State tax because there was no evidence of 2
>>> withholdings taken out of 2 IRA distributions which I
>>> claimed on my State tax filing. After speaking to a State
>>> tax rep I was told that if I mailed the 1099R forms to them
>>> they would re-evaluate my account and send me a refund.
>>> After 2 months (after mailing the forms to them) they
>>> claimed they never received them.
>>>
>>> I contacted a local State tax office and they finally
>>> awarded me a refund for $2365.00 ; they stated that the
>>> difference between the amount of the check I sent them at
>>> the end of June and the amount refunded now is the interest
>>> assessment for the estimated underpayment in the amount of
>>> $175.62.
>>>
>>> Why should I pay interest when I filed on time and the
>>> withholding amounts were sent to the State on time? Doesn't
>>> the State credit accounts when they receive withholding
>>> amounts such as these? My name and SS# were on the 1099s.
>>> Why was I told I should have sent the 1099Rs in when I
>>> filed? I thought all the tax form required was to staple
>>> W2's to it when filing, not 1099's.
>> That's something you'll have to settle with your state tax
>> department. Each state has its own laws regarding
>> distributions. In some states, the distributions would not
>> even be taxable. As for the interest owed, did you have
>> other income which would have increased your state liability
>> without regard to the retirement funds??? They may be
>> charging for any amount underpaid, on that other income,
>> regardless of the IRA's.
> I did kick it up for further explanation. I was told that
> the interest was charged because I owed in excess of $500 at
> the time of filing. That is an assessment because of that
> reason.
You've stated, if I remember correctly, that there was no
underpayment. If that's the case, chances are that your
explanation reached them after the program billed you what
had been recorded as an underpayment. I'd be back in touch
with your state, in any case, to explain the mixup and ask
them to remove the interest/penalty. You should attach ALL
documents which show that taxes have been withheld (W-2's,
1099's. etc). This is true of both federal & state returns.
It takes time for those documents to be credited to your
account. When you file your return, the IRS relies upon the
information you provide.
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