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I received a CP2000 tax notice for the 2010 tax year for 4 stock trades that I failed to report. I received a bill for $2,950 and paid it within the 30 days so no penalties would accrue. Afterward, I compiled all the paperwork to show that I didn't owe a single penny of the tax bill since I lost more than half of my investments. I showed the IRS all the detailed paperwork and finally got a response. I'm receiving a refund of only $2,265. However, they're charging me interest on a bill I never owed in the first place and they listed the IRS code section 6601 as the reason. Can the IRS still charge me interest on money I never owed in the first place?
ANSWER
The BIDaWIZ Team's Answer:
We believe the IRS may be stating that the interest is based on the penalty for failing to pay within 21 calendar days as per Section 6601(e)(2)(a). This would be independent of the actual tax refund due. There may be a way to fight this, but we would need to review the notices in detail and have a greater understanding of the trades involved.
