22 Is there a way to check if this happened? I'm not aware of owing anything, but I guess it's possible something slipped through the cracks.

11 You can usually see this on your state's "Where's My Refund" tool - it would say something like "refund offset" or "refund applied to outstanding debt" instead of just "refund issued." You can also call your state's offset program directly - most states have one that handles when refunds are diverted to pay debts. If it just says "refund issued" then it's likely not an offset issue but rather something went wrong with the deposit. Another thing to consider is if you had tax preparation fees taken out of your refund - sometimes this can cause delays or issues with the final deposit.

20 Good point, I'll give my bank a call. Though wouldn't they typically notify you if they were holding a deposit for review?

8 That's interesting. So if I had moved into the house instead of selling my share to my brother, I could have potentially sold it tax-free later? Do you know if the 2-year clock would start from when my dad passed away or would time he spent there count too?

10 The 2-year clock would start when you actually owned the house, so from the time you inherited it. Your father's time living there wouldn't count toward your ownership period. And yes, if you had moved in and lived there for at least 2 years, you could have potentially excluded up to $250,000 of gain when selling. But remember, with inherited property, your basis is stepped up to the fair market value at date of death anyway, so you'd only pay taxes on appreciation that occurred after you inherited it.

11 Good point! I live in California and don't think we have a state inheritance tax, but I'll double check. Does anyone know which states have inheritance taxes?

25 Only six states still have inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Each state has different rates and exemptions. Some exempt close relatives entirely while others have lower rates for them. If you're in California, you're right that there's no state inheritance tax there. But always good to verify based on where the property was located, not just where you live. The tax typically applies based on where the deceased person lived or where the property is located.

Thanks for bringing this up - it's possible I didn't actually pay after responding. I sent back the response form agreeing to the amount, but now that I think about it, I don't remember if I included a check or if I was supposed to wait for a payment instruction. That could definitely be the issue. Has anyone here paid after responding to a CP2000? Did you include payment with your response or wait for them to send payment instructions?

You generally have two options: you can include payment with your CP2000 response, or you can wait for the IRS to send you a bill after processing your response. If you chose the second option and they haven't processed your response yet, that's likely why you received the CP3219A. I'd recommend calling the IRS (using one of the methods others suggested to get through) and ask about the status of your case. Tell them you agreed to the CP2000 and want to pay the amount due immediately. They should be able to take your payment over the phone or give you instructions for paying online. Make sure to get a confirmation number for any payment you make.

This happened to me too. My company's stock admin platform reported the sales to my brokerage but the cost basis information didn't transfer correctly. The IRS only saw the proceeds and thought I made way more profit than I actually did. What a mess.

This is super helpful, thank you! I just called the estate attorney and she's going to send me copies of all the paperwork including the 1099 forms. She seemed to think it was probably a coding error too. Do you know if I need to file an amended return or is a dispute letter enough?

If you never reported this money as income on your original tax return (which you shouldn't have if it was inheritance), then you don't need to file an amended return. You just need to respond to the IRS notice with a clear explanation and documentation. Your response should include: 1) Death certificate copy, 2) Documentation showing you were a beneficiary, 3) Any incorrect 1099 forms with an explanation of why they're wrong, and 4) Documentation of the step-up basis if there were securities involved. If all this seems overwhelming, it might be worth paying a tax professional who specializes in estates for a one-time consultation.

This is a really important point. My family went through this with my grandmother's IRA. We all got distributions and ALL of it was taxable because it was a pre-tax retirement account. The step-up basis rules don't apply to IRAs and 401ks the same way they do to regular investment accounts. OP specifically mentioned it was "not an IRA" but sometimes people don't realize what type of accounts they're inheriting. If it was any type of retirement account (traditional IRA, 401k, 403b, etc.), those distributions are definitely taxable.

Thank you for bringing this up! I'm 100% sure it was a regular brokerage account and not a retirement account. I just got off the phone with the estate attorney who confirmed it was a non-retirement investment account, so it should have gotten the step-up basis treatment. She's going to send me all the documentation tomorrow, but she believes Fidelity incorrectly coded the distribution which is why the IRS thinks I owe taxes. I'll update once I know more!

Do all states have annual fees for LLCs? That might be a dealbreaker for me since my side gig only makes about 8k a year.

Not all states have the same fee structure. Some have low or no annual fees, while others like California are expensive. For example, Wyoming, New Mexico, and Arizona have very low annual fees under $100. If you're only making about $8k a year, you definitely need to calculate if the fees make sense for your situation. In many cases for smaller side hustles, operating as a sole proprietor and maximizing your eligible deductions on Schedule C is the most cost-effective approach. Just make sure you have good records of all business expenses and consider getting business insurance for liability protection instead of relying on an LLC structure.

That's interesting - wouldn't both show up on the same line of your tax return though? Schedule C income is Schedule C income whether it's from an LLC or sole prop, right?