If the IRS accidently refunded me more money than it was supposed to, should I have to pay it back?

Question

In Feb 2006, Jackson Hewitt (tax center) told me that I owe the IRS money. Later in 2006, I paid the IRS the money owed to them.

In Feb 2007, H&R Block (tax center) told me I was due a refund. The IRS said to me that H&R Block calculated the wrong refund amount and they refunded me a higher amount. I kept that money.

In April 2008, the military base tax center told me I was due a refund. The IRS refunded me the same amount that my tax center calculated.

In July 2008, when I called the IRS to inquire about my wife's ITIN number, the IRS informed me that I owe them the extra amount of money they accidently gave to me in Feb 2007.

What do I do now? Please, only serious answers. I am not a rich person, and the little money I make as a soldier is what my family survives on. This is important to me. Thanks.

Answer 1

You need to find out why the IRS believes that you owe them additional tax from February 2007.  If your wife's ITIN is the problem, then I think that you need to make arrangements to pay back the IRS.

Since they refunded the money by mistake, they should waive all penalties and only charge the minimum interest allowed by law.

Answer 2

You seem to be saying that the payment you sent in Feb, 2006 to pay the tax due for 2005 was applied to your 2006 account as an estimated tax payment in error and refunded in 2007 along with the 2006 refund you expected.  But there is a problem with that.  If you filed your 2005 return showing a balance due, the IRS would have been billing you for that since 2006.  In addition, your 2006 refund, the one mailed to you in 2007 or the 2007 refund, mailed to you in 2008, would have been reduced by the outstanding balance for 2005.

In answer to your question, if your tax is underpaid because the IRS sent you money it should not have, you are morally required to pay that money back.  It is impossible to tell from your narrative, especially given its inconsistencies, if your are legally required to re-pay the money.

Answer 3

contact IRS and tell them to send you a record of account, or a transcript so that you can review your tax information.

These transcripts will show any changes made on your account and where money was applied and transferred.

Does the IRS know you were military status or combat zone status?

IF IRS states you owe then you should be able to request an installment agreement using Form 9465 see IRS website for Installment agreement Fees.

Good Luck!

Answer 4

You shouldnt have kept it when you knew it was wrong. You are now paying for it.

Answer 5

Hate to tell you this, but if they accidentaly refunded too much money you will have to pay it back.  Hopefully the IRS will not be as bad as CRA (Canada Revenue Agency).  not only would CRA want the $$ back they would charge you interest on the amount.