Letter to Congresswoman Carolyn Maloney sent August 1, 2011

18 Aug

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Letter to Congresswoman Carolyn Maloney sent August 1, 2011

I live in Israel. Marylouise Serrato of the ACA suggested I contact you as I believe I am being unjustly treated by the IRS.

My wife and I, in our latter years, I being 70 and Nancy 67, have been selected “at random” by the IRS for a compliance research examination for the tax year 2008. I was sent a seven page Form 4564 listing all the documents required for the audit. I must also fill out Forms 9209, 9211 and 9213 providing appropriate certified translations of each document.

We maintain dual citizenship and have been full Israeli citizens since 1992. We file and pay income taxes to the US every year. We also pay Israeli income taxes every year and have owned our house on Moshav Evan Menachem for the last 13 years. It is quite clear that we are eligible for the Earned Income Exclusion and that, even if we claim our gross earned incomes from my medical work ($28,743) and my wife’s farming work ($50,691), without reduction for expenses, we do not exceed the maximum allowable Earned Income Exclusion for the tax year 2008.

They want proof of our Israeli residency, which is in Hebrew. The want all the documentation regarding all expenses claimed on the Schedule C of our self employment endeavors, which, obviously also is in Hebrew and, according to the tax compliance officer, requires “Certified Translation.” All these translations entail a huge amount of work, time and expense to complete. Needless to say, our earned income, even if you don’t reduce it by business expenses, does not exceed the maximum earned income exclusion for 2008. We have always paid the self employment tax (social security) based on this earned income.

I feel that this total audit is unfair because the IRS has no representative in Israel. We deal with the office in Puerto Rico. They have no one who can read and understand Hebrew. If they want to review all this documentation they should provide a means of their understanding it such as an IRS officer in the Embassy here. I really have been depressed and distraught over this whole affair. I believe that it caused my acute appendicitis, which occurred three days after receiving the notification of this audit. I have even thought of taking my own life.

I turned to the Tax Advocate Service for assistance and they requested that the IRS carry out a limited/focused audit instead of the all-inclusive compliance research exam. The request was denied by the IRS. After that, the Advocate said they could not help me any more and closed my file.

Can you help me in any way or refer me to anyone who might be able to influence the IRS to at least carry out a focused audit? Can you draw this to the attention of someone in the IRS who might be able to help?

Thank you for anything that you try to do.

Author’s addendum: This inquiry was not answered as of this date


11 Responses to “Letter to Congresswoman Carolyn Maloney sent August 1, 2011”

  1. Tax Payer August 16, 2012 at 6:24 PM #

    I feel your pain. I’m the lucky recipient of nearly identical paperwork. It is a huge inconvenience.

    • Another Taxpayer November 9, 2012 at 9:08 AM #

      I’m in a similar position and just received my audit papers last week. Do you have any advice for me?

      • danielkovnat November 9, 2012 at 12:09 PM #

        Start digging up all your bills, receipts and cancelled checks. Contact your accountant who assisted you in filing your return as they are professionally responsible to assist you. Contact a lawyer if necessary. You will have to call the IRS person assigned to your case, but only answer their questions with short and to the point answers. Don’t wax eloquent. Don’t get friendly with them. Anything you say may be used against you. Do an internet search for “How to respond to IRS audit” and you’ll find a wealth of helpful information. Good luck.

  2. susan August 25, 2012 at 6:17 PM #

    The same thing is happening to me because I took the child credit for two years. I would like to contact someone about this. If there is anyone out there in Israel who this has happened to please email me.

    • danielkovnat August 28, 2012 at 4:06 PM #

      It’s as if the IRS has nothing to do but chase the small fish around the ocean. Why don’t they spend the time and money, instead, by trying to catch the big fish tax evaders?

      If you meet all of the six following qualifications/tests for the child tax credit and not the income limitations, you have nothing to worry about. They are based on age, relationship, support, dependent, citizenship, and residence, as follows:
      Age Test – To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2010.
      Relationship Test – To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
      Support Test – In order to claim a child for this credit, the child must not have provided more than half of their own support.
      Dependent Test – You must claim the child as a dependent on your federal tax return.
      Citizenship Test – To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.
      Residence Test – The child must have lived with you for more than half of 2010. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.

      Limitations – The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

  3. Harley Snyder April 7, 2013 at 6:09 PM #

    As a tax preparer who has specialized in tax returns for Americans Abroad and foreign missionaries since 1994, I saw virtually no expatriate audit activity by the IRS until 2011.
    Now, it appears they are using Form 9209 against bona fide residents as a way to train new employees! Our office has responded to two situations recently where the obvious result was correct filing by the taxpayer.

    Unfortunately, the IRS demand cannot be ignored, but “falsely accused” taxpayers can prove their case without undue expense.

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