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Tax Law (Questions About Taxes)/IRS Notice of Deficiency - Regarding IRA Withdrawal


In 2010 I had a Bank CD in the amount of $100K come due.  This was regular savings not IRA money.  

I went to deposit the funds into my Regular Brokerage Acct.  By accident I got my Reg and IRA account numbers wrong and accidentally deposited the funds into my IRA account.  As soon as I found out about the Clerical Error I called my broker and they had me fill out a form for an Excess Contribution.

At the end of the of the year I received a Form 1099-R showing Distribution Codes 8 and 1.  8 is the code for excess contribution.  I put all the information into TaxCut and there was no issue shown.

Anyway 2 years later I get a Letter from the IRS showing a Notice of Deficiency due to the IRA withdraw.  They want me to pay taxes on the $100K that was accidentally deposited and then withdrawn.

I figured this would be easy to clear up after all you are not even allowed to deposit more than $3K a year in an IRA.

But when I called the IRS it was like talking to a wall and they just keep stating you have to pay the amount.  


How hard can this simple clerical error be to understand?

What is your suggestion on how to proceed.  Do I actually need to go to tax court to solve such a simple issue?

Thanks in advance,


Thanks for your question.

The IRS can definitely be difficult to work with at times. You don't need to go to tax court.  You need to respond to the IRS in writing, detailing the events that occurred, including evidence that the excess contribution was corrected.  If you don't feel competent to handle this, any CPA or Enrolled Agent who is involved in tax work and IRS representation can assist you with the written presentation you make to the IRS.

It may be a long, slow process, but you appear to have the facts and evidence on your side, so you should not pay the tax and penalty.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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