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THE IRS OWES ME OVER $28,000 FOR OVER CHARGING ME SEVERAL YRS. HAVE NOT PAID BACK. WHAT ARE MY RECOURSES?
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I AM DISABLED, I GOT A DIVORCE AND RECEIVED MONEY FROM MY EX-HUSBANDS' SAVINGS PLAN FROM WORK. IT WAS IN AN IRA ACCOUNT. SINCE I WAS YOUNGER THAN 59 1/2 AND I NEEDED TO USE SOME OF THE MONEY, I WAS CHARGED AND PENALIZED 49% FOR EACH DOLLAR I TOOK OUT. I TOLD THE BANK I WAS DISABLED, BUT THEY SAID I DID NOT QUALIFY. I HAVE BEEN RECEIVING DISABILITY FROM SOCIAL SECURITY. AND THE BANK AND PREVIOUS TAX PREPARERS ENTERED WRONG CODE. I HAVE A NEW TAX PREPARER AND WE HAVE SUBMITTED AMENDED COPIES OF MY TAXES, DELIVERED THEM PERSONALLY TO THE IRS OFFICE IN SAN BERNARDINO SINCE 2009. I WAS TOLD I WOULD BE REIMBURSED WITHIN ELEVEN (11) WEEKS. THEY REQUESTED CORRECTED PAPERS FROM BANK SHOWING I AM DISABLED, WHICH THEY HAVE HAD FOR OVER A YEAR. I CAN'T GET ANY INFORMATION FROM THEM? PLEASE HELP.
Two things. First, contact the Taxpayer Advocate. This is a free service offered by the IRS which is not controlled by the IRS. I'm sure they can help you. Failing that, in the U.S. the District Courts and Court of Claims have jurisdiction over money disputes such as you describe, with the IRS. You can see an attorney and file suit in U.S. District Court for the refund. This will probably get their attention and get your refund.
When you took the money out of the IRA prior to turning 59 1/2 you were required to pay income taxes on the that money at your tax rate, plus a 10% excise tax (the equivalent of a penalty for early withdrawal). There are exceptions to the 10% penalty including the fact that you are disabled. You are not entitled to a refund of the income tax that is owed, if any. In addition, I would have to question the 49% that you cite, as "charge and penalty". The highest tax bracket for years 2009 and 2010 is 35%. Add in 10% early withdrawal penalty and you're up to 45%. Anything above that is interest and other applicable penalties (ie. late filing penalty). Interest cannot be abated and neither can the income tax. I doubt however that you were in the highest tax bracket. The important fact to remember is that the withdrawal from the IRA was taxable. In addition, you have filed amended returns which should generate a refund of the penalty and interest associated with the penalty - but not any income tax that might be owed. Since you haven't heard in over 11 weeks you should get a hold of an IRS ombudsman.
You can request an ombudsman by using IRS Form 911, Application for Taxpayer Assistance Order to Relieve Hardship, available at IRS Problem Resolution offices throughout the United States.
I hope this helps.
If you meet an exception as you have indicated, then you may have the penalty abated. You can claim this by submitting an amended tax return as you have done. An amended tax return can take up to a year to process. You may want to consider hiring a tax professional to follow up on this matter for you.
