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California Taxpayer Advocate Service Fixes Mistake, Saves Woman's Refund.

Knight Ridder/Tribune Business News, September, 2002

By Loretta Kalb, The Sacramento Bee, Calif. Knight Ridder/Tribune Business News

Sep. 15--It was a nightmarish tax snafu.

A woman inherited property from her father in 1988 and immediately sold it. By law, she owed no taxes on the sale. She was told, therefore, that she need not file a federal tax return.

Unknown to the woman, the escrow company had notified the Internal Revenue Service about the property sale, which appeared to the agency as a taxable event. So the IRS, unable to find the woman, filed a return on her behalf, calculating a large tax bill.

The woman, who worked intermittently, did not learn about the tax bill until 1996, when she filed a return and sought a refund.

But the IRS took her refund to pay a...

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