Is the IRS out of control?

Because my Tax Preparer (H&R) forgot to include $18 interest in my tax return with an income of six digits, they have started a paperwar. The 18 Dollar changes a dozen numbers on the return and they want interest for a year on it. A friend of mine had his Bank in Canada report internal movements in his retirement funds as profits to the IRS. He hasn't touched the funds in 20 years. Now he is in trouble. Anybody know, what's going on, or has similar experience?

Tax code is very immense and confusing. I think a straight line tax across the board would be best, but for now, we have to put up with this very confusing, time-consuming, and expensive tax system.

In a lot of the cases in dealing with the IRS it all depends on what the person at the IRS's end is like. I'm a CPA/Tax Preparer and have dealt with people at the IRS who are very helpful. And in the case of the $18 interest, I hate to say it, but the irs rules are very strict on the matter, and they are right to want interest for a year on it (I'm assuming this is for your 2005 taxes, not your 2006?)

If the income isn't claimed and the IRS catches it, you'll be stuck with the penalties and interest. That's just the way that it works. If Block prepared the return incorrectly, they normally will eat the penalties and interest though you will have to pay the additional tax due.

Your friend's claim that a Canadian bank is reporting internal movements of funds to the US IRS is a stretch at the very least. Without knowing all of the facts it's not possible to comment on that.

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