IMRS Monthly Overview - September 2011
IMRS Issue 11-0001516 – CP2000 sent to borrowers not listed on Form 1098
Issue: Taxpayers who own property jointly with another individual are receiving CP2000 notices questioning the deduction for mortgage interest. The Form 1098 was issued under the Social Security number of the other owner. Is there a way to cross-reference this information to prevent these erroneous notices from being issued?
IMRS Issue 11-0001522 – Late payment penalty assessed
Issue: Several taxpayers who paid at least 90% of the tax due with their 1040 extension request received CP 14 notices assessing the failure to pay penalty.
IMRS Issue 10-0001370 – Correcting erroneous account information for direct deposit refunds
Issue: A tax professional requested that the IRS institute a procedure for correcting erroneous bank account numbers entered on electronically filed returns for direct deposit of refunds. Currently the IRS is unable to correct account information, so these refunds may be deposited into the wrong account.
Response: The IRS generally cannot stop a refund once the return has been accepted.
As a reminder to tax professionals, you can help your clients ensure their funds arrive as intended by referring to Publication 4542, Splitting Federal Income Tax Refunds, (PDF) at IRS.gov which says:
Encourage clients to bring their account and routing numbers for return preparation and to double-check the accuracy of account and routing numbers entered on tax returns.
The IRS assumes no responsibility for taxpayer error, which could result in different scenarios:
- If a taxpayer omits a digit in the account or routing number of an account and the number does not pass the IRS’ validation check, the IRS will mail the taxpayer a check for the entire refund;
- If a taxpayer incorrectly enters an account or routing number and the designated financial institution rejects and returns the deposit to the IRS, the IRS will issue a check for that portion of the refund; or
- If a taxpayer incorrectly enters an account or routing number that belongs to someone else and the designated financial institution accepts the deposit, the taxpayer must work directly with the respective financial institution to recover his/her funds.
IMRS 11-0001484 – Incorrect error notices for Making Work Pay credit
Issue: Practitioners report that their clients are incorrectly receiving math error notices regarding the Making Work Pay credit on returns involving Schedules C or F reporting a loss.
Response: The systemic computation of Making Work Pay earned income is a manual process done by the tax examiner when a loss is present on Schedules C or F. Submission Processing has procedures in place instructing the tax examiner to manually compute the Making Work Pay credit by using the Earned Income Worksheet, line 1a, found on page M-2 of the 2010 Schedule M Instructions, to compute the amount for line 1a and entering the manually computed Making Work Pay Credit amount in the field designated for line 63. The issuance of math error notices was due to policy and procedures in IRM 3.12.3 not being followed by tax examiners in the Error Resolution program. We apologize for the inconvenience caused to the taxpayers.
IMRS Issue 11-0001499 - Revision of Form 656, Offer in Compromise
Issue: A stakeholder asked when the old version of Form 656 will no longer be accepted by IRS.
Response: As of July 5, 2011, IRS will only accept the current March 2011 revision of Form 656, Offer in Compromise (PDF), which is available at IRS.gov.
IMRS Issue 11-0001433 – Use of electronic accounting records in an audit
Issue: When the IRS requests electronic accounting records for an examination, the files provided may include records for other periods that are not part of the audit. Is there a way to limit the access to other years and what assurances are there that IRS will not view or use the other information that is not part of the open audit?
Response: IRS has recently revised and expanded the Use of Electronic Accounting Software Records Frequently Asked Questions on IRS.gov, and the posted information addresses this concern.
Policy, Practice, Procedures
IMRS Issue 11-0001480 – Practitioner Priority Service limits
Issue: A tax practitioner would like to know if there is a limit on the number of taxpayer cases the PPS can assist with or on how many transcripts the practitioner can request during one call.
Response: Practitioner Priority Service assistors are limited to providing 10 transcripts per phone call and limited to servicing up to five clients per call. These limits are intended to be consistent throughout the PPS program. Any inconsistency may have been the result of assistors providing more than the limit when they perceived the additional requests as minimal.
NOTE: Current and previous reports are also available on this site. The monthly overviews are posted for the prior two years 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 local stakeholder liaison.