IMRS Monthly Overview – May 2013
The IMRS Monthly Overview provides synopses of some of the issues received and/or closed by the Issue Management Resolution System staff during the past month. The Monthly Overview informs the public about the work of IMRS and highlights issues that we think would be of most interest to external stakeholders. When the Monthly Overview is posted to IRS.gov, a tweet goes out to Twitter followers of @IRStaxpros. Please sign up if you would like to be notified.
NEW IMRS ISSUES
Policy, Practice, Procedures
IMRS Issue 13-0001809 – Use of e-Fax by campus AUR
Issue: Tax practitioners want to know whether the Brookhaven Automated Underreporter Unit (AUR) has implemented e-Fax. If it has, practitioners would like to receive the e-Fax number as well as information about how the process works. If e-Fax has not yet been implemented, practitioners are asking that it be adopted with a projected date of implementation. They also request outreach on the process.
RECENTLY CLOSED ISSUES
Policy, Practice, Procedures
IMRS Issue 12-0001693 - Dual notices issued on joint returns
Issue: IRS currently issues two separate notices, one addressed to the surviving spouse and one addressed to the deceased spouse, when a joint return was filed and the taxpayers lived at the same address. This is the case even if the IRS knows one spouse is now deceased. It is suggested that this policy be changed so that the IRS issues only one notice addressed to the surviving spouse.
Response: Chief Counsel reviewed the suggested change and responded that current policy cannot be changed because two notices are required by statute. However, thank you for taking time to elevate this suggestion.
IMRS Issue 13-0001730 – Disallowance of education credits on Form 1098-T
Issue: CP 2000 and other IRS notices are being issued to taxpayers who claimed education credits. The notices advise taxpayers that the credit is disallowed because the amount paid to the educational institution cannot be determined. The amount cannot be determined because Form 1098-T only provides information in box 2 (amount billed) with no information in box 1 (amount paid). Taxpayers would like to provide information about amounts paid to educational institutions with their filed returns instead of receiving notices requesting the information.
Response: Verification of amounts billed is not adequate to verify American Opportunity Tax Credits (AOTC) or the tuition/fees deduction. Being billed does not verify that any amount was paid. Both the AOTC and the tuition/fees deduction require that amounts be paid. As long as universities continue to report billed amounts in Box 2 of Form 1098-T instead of paid amounts in Box 1, which is their right per the reporting requirements, the IRS will need to verify the amounts paid.
The IRS’ ability to view attachments beyond those currently transcribed is limited, so asking a taxpayer to submit an additional attachment at filing will only increase taxpayer burden and frustration when they are later sent a CP2000 to verify amounts. As the Automated Underreporter program is a post-filing Compliance program there should be no processing delay associated with an AUR notice. As previously stated, if colleges and universities report amounts billed rather than amounts paid, subsequent correspondence is necessary to validate the paid amounts used in computing the education credits and the tuition and fees deduction. The need for validating these credits and the deduction became more apparent when the Treasury Inspector General for Tax Administration (TIGTA) issued audit report 2011-41-083, Billions of Dollars in Education Credits Appear to be Erroneous. This audit surmised that education credits are a large area of questionable compliance and the Service committed to verifying the deduction.
IMRS Issue 13-0001732 - Daily limit on issuance of Employer Identification Numbers (EIN)
Issue: Tax practitioners request that the daily limit of one EIN per day per responsible party be changed back to five per day per responsible party.
Response: Thank you for taking the time to contact the IRS about revisiting the May 2012 policy change of issuing only one EIN per day to each responsible party. The IRS implemented this change due to a growing number of customers unable to access the system for true tax administration purposes. We experienced a large increase in requests for EINs for activities unrelated to tax administration. These requests frequently slowed or halted the processing of EINs. Because the majority of customers only need one EIN, the IRS made this policy change so the system can continue to efficiently process requests from those who must adhere to a tax-related requirement. Due to continuing concerns over this issue, the IRS must leave the policy in place. We apologize for any inconvenience this change may cause. We appreciate your feedback and will continue to monitor the EIN issuance process.
IMRS Issue 13-0001759 – Estimated tax penalty relief for tax year 2012
Issue: Generally, taxpayers can opt not to make their fourth quarter estimated tax payment on Jan. 15 and avoid the estimated tax penalty if they file their returns and pay the tax by Jan. 31. Tax practitioners are asking whether the IRS is considering any automatic relief for assessing the estimated tax penalty for taxpayers who did not make their fourth quarter estimated tax payment by Jan.15 and intended to file and pay by Jan. 31 but may not have done so because of the delayed start to the filing season and release of some forms.
Response: A request for penalty waiver should be completed by checking Box A in Part II on Form 2210 and attaching an explanation with a list of forms that were not available for making the deposit or filing the return. These requests will be considered on a case-by-case basis.
IMRS Issue 13-0001780 - Difficulty obtaining payoff calculator statements
Issue: A CPA firm continues to have problems using the Memphis Practitioner Priority Service (PPS) to obtain a payoff calculator statement for clients' accounts. They are informed that PPS is not allowed to send the payoff calculator statement; it can only give information verbally.
Response: Telephone assistors are not restricted from providing taxpayers or their authorized representatives copies of payoff calculator worksheets. The IRS will address this issue with all PPS telephone assistors.
NOTE: Current and previous reports are also available on this site. The monthly overviews are posted for this year through the current month. You can also access reports for issues closed in prior years on the same page.
We invite you to raise your issues/concerns with your local stakeholder liaison.