QUESTION
If disputing an IRS adjustment on 2009 taxes, should I pay the amount they say I owe or wait until resolved?
Asked on Nov 30th, 2010 on Taxation - Illinois
More details to this question:
I claimed a first time homebuyers credit on a home purchased by me and my parents (50/50). The IRS has sent me a notice denying the entire credit. I have submitted some additional documents to the IRS office and requested a phone conference, but have not heard anything back from them so I am not even sure what the basis is for the denial. (I think it may be because while my name is on the title and the purchase contract, it was not on the settlement sheet because the loan was taken out by my parents. But that is just a guess.) I do not know if I need to pay the amount they say I owe while this dispute is ongoing, or if I can wait until it is resolved.
1 ANSWER
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If you can, make a payment of the tax now. This will avoid any more interest and penalties if you lose. If you win, IRS will refund the money with interest. If you cannot pay - or don't want to pay - you can wait till the case is resolved, but you will have to pay additional interest and penalties if you lose. Ideally, you should get a tax attorney to help you through this process.
Answered on Dec 01st, 2010 at 2:58 PM