So I received a letter from the IRS...

[Boomer]

I have found the IRS to be reasonable as long as you are reasonable with them. Sending a letter to them with all the required documentation will usually clear up the matter. It may take some time as they tend to be overworked at times. Keep good records and document all of your actions.

[GrimJack]

Update: I got all my documentation together, and my partner's return showing the partial interest deduction for the jointly owned property, and the statements showing we are both on the mortgage. I mailed it and faxed it October 21 before it was due to the IRS on 10/30.

I received a paper letter from the IRS yesterday (more than a month later... 11/25) to let me know they received my materials. Ha!

They also said they'll notify me in writing within the next 60 (sixty) days once they get around to reviewing what I sent and will let me know if they plan to "take any action". They also advised paying the amount requested right now, or else they'll add additional interest and penalties if they don't agree with my assessment.

I'm pretty sure they can go **** themselves...the IRS is a joke.

I am not sure why you feel that the IRS is a joke; the letter is boiler-plate, in your particular situation, recommendation is moot. On the other hand, if there actually was a chance that you would lose the decision, 60 days of penalty and interest would be significant. I understand that no one likes the IRS but remember the wording would have been similar if you were Michael Milken or someone who was trying out a fancy new tax shelter - no one read your response before sending the letter - it is a 'stock' letter, don't take it personally.

[Zim2]

My wife and I just received a notice saying we owe money to our state.............from the 2008 tax year....we go right to the DOR site and see that the statute of limitations is 3 years from the tax due deadline....this is the first notice and the interest they say we owe is more than the original balance, the balance is less than $100...I'm pretty sure the state of Georgia isn't shutting down over this, especially since it took them 5 years to find it...

[witchkizzle]

Like MonkeyMama, I am a CPA in tax practice. I deal with the IRS A LOT! Generally they are very easy to work with and not scary in the least. Every now and then, however, they will go after a big fish and clamp down pretty hard.

Generally in circumstances like this one a letter, phone call or fax will fix the problem very quickly. I find phone calls are the quickest resolution because they will resolve the item while you are on the phone with them (this sort of item is the perfect candidate for a phone call).

I have a few wealthy clients who pay half of their children's mortgages and we split the mortgage interest 50/50 on the returns. We do not include a letter or note on the filing.

[ua_guy]

Update: The "investigation" has been closed and I owe nothing. All that was needed was an addendum to the return that stated I am a joint tenant on the mortgaged property and the interest was split with the other tenant. Thanks all for the advice. We did end up contacting a CPA who confirmed the advice above. She charged us nothing.

I'm glad that's behind me. The IRS makes the DMV/Department of Motor vehicles feel like Nordstroms in comparison, however. I wonder when the IRS will eventually modernize?

[MonkeyMama]

Interestingly, this was a common IRS notice to get during 2013. I attended a tax update this month, and the presenter noted that all his clients who split mortgage interest payments received an IRS notice. So he was polling the audience about that. & in fact, this tax preparer had always attached supporting documentation for the deduction, which is why he was extra peeved about it. What a colossal waste of time...

[ua_guy]

Interestingly, this was a common IRS notice to get during 2013. I attended a tax update this month, and the presenter noted that all his clients who split mortgage interest payments received an IRS notice. So he was polling the audience about that. & in fact, this tax preparer had always attached supporting documentation for the deduction, which is why he was extra peeved about it. What a colossal waste of time...

Interesting indeed. I can't wait, since I filed my 2012 taxes the same way. I think the IRS might be my new penpal.