SSA Form 521/IRS help desperately needed

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SSA Form 521/IRS help desperately needed

Post by nonnie » Thu Mar 25, 2010 6:47 pm

Using Form 521, I repaid SSA benefits for 2005 through 6/2008 in 2008. Initially,I received two 1099s for 2008—one for my account before repayment, one for benefits collected on my ex-huband’s account after repayment when I refilled. Each was incorrect. The 1099 on my own account did NOT linclude my #34,XXX repayment. I contacted the Asstt Regional Comm. for the Western Prog. Serv. Center about this error. I then received *four* new 1099s—in text form—one each for 2005, 2006, 2007 and 2008 along with a letter stating this information had been transmitted electronically to IRS. These were also wrong & I again contacted the Commissioner pointing out the errors, citing the applicable law requiring all repayments to be reflected in the year of repayment and asking for a correction. His letter of response gave the name of the employee handling my account. This SSA employee had apparently decided he knew best and did not follow IRS guidelines that *require* the entirer epayment to be reflected on the 1099 for the year of repayment. Apparently the SSA computers are not set up to reflect repayments of this kind and it all has to be done by hand.

When I didn’t hear anything after a month or so, I called the employee who told me he “still thinks he way I did it is correct, it’s to my advantage and I should just leave it alone”! I was astounded but I insisted that he correct HIS error. Finally after several months of back and forth he issued a correct 1099 for 2008 which showed my $34,xxx, reapayment credit; he also re-issued 1099s for 2005-2007. The employee never was able to accurately correct (even after I gave him the correct numbers—he said he couldn’t figure out how to do it manually )my second 1099 but since it was only off about $250—and in my favor—I gave up. I DID report the correct amount including the $250 in my tax return which I prepared with Turbo Tax.
I’ve just received a letter audit from the IRS based on the INITIAL incorrect 1099s –with no acknowledgement of my repayment, asking for $2000 on income not reported. (to complicate matters, I discovered I didn’t correctly reflect the repayment on my tax return, taking credit for the entire repayment for 2005-2007 rather than just the amount of SS that was taxable—85% or less but this is totally separate from the fact that apparently IRS has no record of the “corrected” 1099s).

I’m totally baffled as to the easiest way to handle this. I can’t merely submit a 1040X for “my” error. I’m afraid if I submit a 1040X for my error and also citing the incorrect 1099s which will nullify the $2000 requested in the letter audit, it’ll get even more screwed up. I believe I need to submit my copies of the final “correct” 1099 but that’s not enough.What should I do? On my account, I have SIX incorrect 1099s—the two initial incorrect ones and the subsequent 4 “corrected” that were incorrect; I have 5 more 1099s with subsequent “correct” corrections. I’m not even going to worry about the one of these that’s off $250 but rather treat it as “correct” lest I go nuts (please feel free to vote on whether this has already happened ) Of the 5 “Correct” corrections only 2 pertain to 2008—the other 3 are corrections for 2005-2007 restoring the originals are of no tax consequence.

I previously contacted the SSA head PR person, Mary Beth Franklin of Kiplingers who also contacted him and my congressional office, but the obnly result of that—as I was told by the regional Richmond SSA office-- “five people at our office are working on this” but NONE of them had the capacity to read the law or make the proper corrections until I sent a copy of the law to them. My local SSA office was responsible for the initial screwup so they’ll be of no help. In the past and currently, I’ve received at least 6 differentways to handle this by SSA and IRS not including several employees who hung up on me and 30-45 minute waits on hold.

I’m in desperate need of help and this isn’t a problem that can be solved by hiring a tax accountant—and why should I spend even more time and money, sigh. I realize this is long but hopefully someone with a similar problem has advice.

MY FINAL ADVICE—Do not utilize Form 521 for SSA repayment especially if you live in the Western Program Service center area or have to deal with the Richmond, CA SSA ... highlight=

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Post by damjam » Fri Mar 26, 2010 7:41 am

I've just read through your story and all I can say is WOW.

I hope you are able to resolve this soon.



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Post by OAG » Fri Mar 26, 2010 7:56 am

Well I repaid in 2008 via a 521. Repaid for myself and the Spousal additional benefits she received based on my record. I did receive initially two 1099 that were incorrect but shortly thereafter (about 30 days) I received two more with the correct amounts on them (and they were specifically annotated "Corrected"). I took the Credit for the tax due on the amounts repaid, as shown on the applicable yearly tax returns on my 2008 tax return, received the correct, refund (a bit late, but they paid me interest for the period the refund was last). All in all a simple process, there were a couple of hiccups along the way, but all is well now.

I suggest that you make an appointment with the local SSA office and ask for a Supervisor to get the SSA part resolved (during one of my "hiccups" that is what I did and it was all cleared up quickly). I also suggest you ask for an appointment with the IRS and sit down with a knowledgeable agent (supervisor) and try to get the tax part resolved.
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979.

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Post by JW-Retired » Sat Mar 27, 2010 7:36 am

nonnie wrote: MY FINAL ADVICE—Do not utilize Form 521 for SSA repayment especially if you live in the Western Program Service center area or have to deal with the Richmond, CA SSA
Sorry this is still not over after 2 years. Appreciate the warning not to count on the 521 repay route.

The rampant incompetence of the SSA bureaucrats seems beyond belief. But perhaps it's not only innocent incompetence. I think maybe some are willfully trying to screw over people who attempt something slightly different from the norm. Let's teach this wise guy a lesson for trying to game the system.

I got a whiff of this just taking spousal benefits at age 66 instead of claiming my own. But nothing like your troubles.
good luck,

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Post by paulv4 » Sat May 01, 2010 3:19 pm

I hope you get everything settled.

I am in the process of evaluating the submission of a Form 521.

In an earlier thread from 2008, referring to your original submission, you mention the attempt to re bill you for the medicare portion of the amount you repaid to SSA.

In a meeting at our local office, I was given the same reasoning you were, (that you were never entitled to the benefits, therefore medicare should never have been paid), as to why they needed to be repaid again, after the full repayment.

How was this portion of your horror story resolved?

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Post by sscritic » Sat May 01, 2010 3:37 pm

Keep trying logic:

"I was paid XXX of which YYY was for medicare; I took home XXX minus YYY. I am paying back XXX, which includes both what I got (XXX minus YYY) and the medicare YYY."

I don't know if the truth and logic will win out, but keep trying.

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Post by nonnie » Sun May 02, 2010 7:36 pm

paulv4 wrote: How was this portion of your horror story resolved?
Hi Paul,
Well, i kind of like SScritic's solution--logic :D --but it took forever to work for me. When I filed my initial claim I went in with my tax returns and 1099s and I knew exactly what I received and needed to repay. SSA printed out the same thing but then couldn't do the math. I was prepared with a check for the exact amount due. They took it but wouldn't guarantee it would "cover" things. I just persisted, congressman, regional office, Bogleheads, etc. And finally my claim apparently worked it's way up to someone who could do math and they asked me for a check for $34,xxx--the exact amount I'd repaid. Then we had to go through the dance of where was the check. Then we had to go through the dance of what I owed for the 3 months of Medicare --that I had paid directly to my SSA office--that hadn't been deducted from my check--because I wasn't collecting. It took 3 months and about 5 tries for them to get this math right.

In the end--for the Medicare repayment--what I did was similar to what SS says--I said, "my benefits are $1000; you withheld approx $100 every month for Medicare, I got $900. I need to repay the $1000 in benefits--NOT $1100 as you are asking--still didn't work.

I finally got the SSA portion of my tax problem completed--turns out, sigh, even though I changed my address with SSA when I moved 1.5 years ago, they had "two" addresses on file and because I'm collecting on my ex-husband's record, they thought it was his address or some such and had been sending things to my "old" address. It's always something. IRS told SSA that IRS will accept a handwritten 1099 that doesn't say "corrected" on it as long as it is accompanied by a letter on SSA letterhead that explains what the problem is. SSA says they faxed this letter and 1099 to IRS and I finally have a copy of it. I'm lying low until I hear from IRS again --I don't see any point in contacting them as I've already written and told them I don't accept their "adjustment."
I don't know how OAG did it--probably based on the region where he lives--but I'm jealous of him getting a "real" & "corrected" 1099. :D

Finally make sure that if you DO submit Form 521 you have them write on it, I do NOT want to unenroll (disenroll) from Medicare (this shouldn't be necessary as that's not supposed to be what Form 521 does but I've been told it's best to have it in writing. And---make sure you have a plan to pay your Medicare premiums during the period you aren't collecting SS.

Blessings upon you, you'll need 'em :D


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Post by the intruder » Sun May 02, 2010 7:36 pm

you need to hire a tax advisor. You cannot do this stuff yourself.

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