IMRS Monthly Overview – July 2012
The IMRS Monthly Overview provides synopses of some of the issues that were received and/or closed by the Issue Management Resolution System staff during the past month. The Monthly Overview is intended to inform the public about the work of IMRS, and highlights the issues that we think would be of most interest to external stakeholders. When the Monthly Overview is posted to IRS.gov, a tweet is posted via Twitter for followers of @IRStaxpros. Sign up to receive notification.
IMRS Issue 12-0001604 - Roth conversions Form 8606
Issue: Taxpayers file Form 8606 to report tax when rolling over their traditional IRA to a Roth IRA, and to identify their choice to report the resulting tax in one or two years. However, some taxpayers are receiving CP2000/CP2501 for additional tax due that indicates the Form 8606 was not taken into consideration when computing the tax.
Response: In some cases, software used by return preparers could inadvertently fail to transmit taxpayer information contained on Form 8606, even if the taxpayer initially provided this information. Without this information, the IRS will send a notice requesting tax on the full amount. Generally, the IRS can promptly resolve this issue if taxpayers or their tax preparers respond to the notice with a copy of the Form 8606.
Communication and Outreach
IMRS Issue 11-0001519 – Alerts for new IMRS reports
Issue: A tax practitioner suggested that the IMRS staff implement a procedure to alert practitioners when a new Hot Issues, IMRS Monthly Overview or Industry Issues Quarterly Report has been posted to the IMRS page on IRS.gov.
Response: In response to your suggestion, we now include an article in e-News for Tax Professionals and use Twitter to alert subscribers to newly posted reports. We have also taped a commercial for use in upcoming IRS Webinars and IRS-Live segments to market the IMRS. In addition, we have asked all our liaisons to discuss IMRS at stakeholder events, highlighting IMRS publications and the most current issues resolved.
Policy, Practice & Procedures
IMRS Issue 12-0001582 - Language in Letter 3402, No Change with Adjustment, is not in conformity with Internal Revenue Manual 18.104.22.168.2
Issue: Letter 3402, No-Change with Adjustments, implies that a taxpayer cannot contest adjustments until changes affect the tax liability of the NOL carryback tax period. This appears to conflict with the Appeals policy noted in IRM 22.214.171.124.2.
Response: Exam Policy is collaborating with representatives from Appeals, LB&I and Counsel to address the inconsistencies between the IRMs for Appeals and Exam. The Letter 3402 will be revised if needed.
IMRS Issue 12-0001605 – Form 990 extensions
Issue: Notice 2012-4 granted an automatic extension for filing Form 990 to certain exempt organizations. The notice required organizations to attach a reasonable cause statement to the 990 return, referencing Notice 2012-4, in order to avoid receiving a system-generated penalty notice for late filing. Organizations that failed to attach the reasonable cause statement with the return are being advised to mail in the statement in order to get the penalty abated. A tax practitioner suggested that the IRS adopt a more streamlined procedure, perhaps a phone call to PPS or the Tax Exempt Organization line.
IMRS Issue 12-0001671 – Redaction of Social Security numbers in IRS correspondence
Issue: Practitioners in New Jersey are requesting that the IRS redact Social Security numbers in notices and letters to reduce the chance of identity theft. Currently, Social Security numbers in letters issued from the Automated Collection Service are redacted, but those in other IRS correspondence are not.
Response: In an effort to protect citizens from identity theft, the U.S. government is working to identify ways to authenticate taxpayers without the full use of their Social Security number. In May of 2007, the Office of Management and Budget issued Memorandum M-07-16: Safeguarding Against and Responding to the Breach of Personally Identifiable Information. The memorandum requires all federal agencies to take steps to eliminate or reduce the use of SSNs in order to protect citizens from identity theft.
In response to the requirement, the IRS's Social Security Number Elimination and Reduction Program has made significant strides in eliminating or reducing the use of SSNs within our systems, forms, notices and letters where the collection or use of the SSN is not necessary. We are exploring several initiatives, which will take place in phases.
The first initiative of eliminating or reducing the use of SSNs on outgoing non-payment notices has been successful. We have redacted the SSN on 46 different non-payment notices and have already mailed over 22 million of these notices to taxpayers. We will continue to eliminate and reduce the use of SSNs on additional notices and correspondence throughout the next few years.
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 stakeholder liaison.