James and Katie Gill - Page 5




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          then recalculated petitioners’ tax liability as $3,679 and, in              
          July 2000, issued a refund check in the amount of $580.99.5                 
               Upon receiving the refund check, petitioners questioned the            
          matter by contacting one of respondent’s representatives at an              
          “800 number”.  The representative agreed with petitioners that              
          respondent had made a mistake and requested that petitioners                
          return the refund check.  Petitioners did so.  However, a couple            
          of months thereafter, by letter dated September 7, 2000, another            
          of respondent’s representatives advised petitioners as follows:             
               We received the returned refund check for $580.99.  Our                
               records show you incorrectly figured your pensions and                 
               annuities as taxable social security.  The refund is                   
               correct and will be reissued.                                          
               If you have any questions, please call Ms. Robbin                      
               Cooley * * * .                                                         
               Petitioners contacted Ms. Cooley, who insisted that                    
          petitioners had incorrectly reported their Social Security                  
          benefits as taxable.  Thereafter, upon receipt of the second                
          refund check, petitioners cashed it.                                        
               Ultimately, well over a year later, respondent concluded               
          that petitioners had correctly reported their Social Security               
          benefits and that respondent had erred in issuing petitioners a             


               5  The amount of $580.99 was calculated as follows:                    
               Liability reported and paid per return           $4,256.00             
               less: Liability as recalculated by respondent    -3,679.00             
               Decrease in tax                                     577.00             
               plus: Interest due petitioners                        3.99             
               Amount of refund check                              580.99             





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