IMRS Monthly Overview – November 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.
NEW IMRS ISSUES
Communication and Outreach
IMRS Issue 13-0001731 – Practitioner Requests ‘Tweets” of IRS News Releases
Stakeholder/Practitioner Organization requests a ‘tweet’ be included on all IRS News Releases. Providing the ‘tweet’ upfront would allow the Stakeholder to disseminate the information more expeditiously to their members. In addition, the Stakeholder suggests a link to the News Release be included with the News Release itself. Providing a link to the News Release would allow the stakeholder to provide the link to their distribution lists.
IMRS Issue 13-0001730 – Disallowance of Education Credits
Taxpayers are receiving CP2000 notices disallowing their education credit because Form 1098-T only shows the amount billed in box 2, but nothing for the amount paid in box 1.
RECENTLY CLOSED ISSUES
Policy, Practice, Procedures
IMRS Issue 08-0000921 - Disclosure by Payroll Firms Regarding Employer Responsibility for Employment Taxes
Issue: A national payroll organization recommended that payroll firms be required to inform their clients that employers remain liable for payment of their payroll taxes. The organization recommended that payroll firms inform their existing clients at least quarterly and their new clients prior to or at the time of contracting for services. They also recommended that payroll firms provide information on how employers can verify the federal and state tax payments made on their behalf.
Response: A requirement to disclose this information is now included in Revenue Procedure 2012-32.
IMRS Issue 10-0001349 - Form 8655, Reporting Agent Authorization
Issue: Reporting Agents are not authorized to work with IRS to resolve issues related to new information Forms 3921, Exercise of an Incentive Stock Option Under Section 422(b) and 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c).
Response: A suggestion received from the reporting agent community has been incorporated into Form 8655, Reporting Agent Authorization, revised January 2012. Authorization to receive information related to the new information returns, Forms 3922 and 3921, has been added to the 8655. This will allow reporting agents to work with IRS to resolve any issues related to these new forms.
IMRS Issue 12-0001635 – Issuance of CP2000 for Cancellation of Debt Income When Form 982 Attached to Return
Issue: Preparer states AUR is issuing CP2000 for cancellation of debt income where F982 attached to return shows amount excluded from total reported on F1099. Why is AUR challenging amount reported as taxable when F982 is attached?
Response: Cancellation of Debt (COD) is pursued with the CP 2000 when the Form 982 indicates the taxpayer is excluding the Cancellation of Debt amount due to Insolvency. The CP 2000 requests verification for the extent of the Insolvency, ". . . a breakdown of your total assets and liabilities immediately before the debt was discharged.” in order to determine whether or not there is a tax consequence.
While the worksheet/calculation is not required to be filed with the Form 982, a calculation must be completed by the taxpayer to determine whether or not they are insolvent. If COD is the reason for selection in the AUR program, the CP 2000 is issued requesting verification of the calculation used to determine the insolvency exclusion treatment indicated on the Form 982. The IRS will request verification of the calculation as a means of verifying the correct tax treatment of the cancelled debt. Checking Form 982, Box 1b does not verify the calculation was completed or completed accurately. Publication 4861 provides a TIP advising the taxpayer that a worksheet is available in the publication for calculation of the insolvency. A suggestion was forwarded to revise F982 to include information regarding the insolvency calculation but this has not been approved at this time.
IMRS Issue 12-0001668 – PPS Assistance with Registered Domestic Partners Issues
Issue: Practitioners state PPS assistors need training on Registered Domestic Partners (RDP) tax related issues. Practitioners call PPS to discuss RDP tax returns and tax related issues and the PPS assistors do not understand these types of tax related issues, etc.
Response: Priority Practitioner Service (PPS) assistors receive Continuing Professional Education, which includes any updates to Registered Domestic Partners (RDP) instructions. Additionally, based on this recommendation, the PPS Manual is being updated to enhance RDP procedures. For RDP questions that are not account related, the practitioner should contact a tax law specialist at (800) 829-1040 for additional assistance. Thank you for this recommendation and we apologize for any inconvenience you may have experienced.
IMRS Issue 12-0001694 – Correspondence Examination Concerns
Issue: In response to a brief presentation by Campus Correspondence program employees, Field Examination employees raised concerns about the Campus Correspondence Examination program. They report that there is a lack of communication, responsiveness, & cooperation by Campus employees when Field Examination has the same year and/or subsequent year returns under examination.
Response: We take your concerns seriously and we work hard to address them. The concerns identified regarding Campus Correspondence Examination are currently being reviewed as part of a comprehensive project. Upon completion of the review, Correspondence Examination plans to provide feedback and information; this may be done as a webinar, tax topic or frequently asked questions. We appreciate you taking time to identify and elevate these concerns and hope you continue to work with your stakeholder liaison should any future concerns arise.
IMRS Issue 12-0001699 – Change of Address and Notice Generation for Separated Taxpayers
Issue: Practitioners ask whether filing the Form 8822 will automatically generate notices to both residences in the case of taxpayers filing jointly with separate addresses. If not, practitioners are asking that consideration be given to reprogram the notice system to automatically issue notices to both taxpayers when they are living apart.
Response: Thank-you for your inquiry. When a Form 8822, Change of Address, is filed to establish a separate address for the spouse, the IRS Entity function will establish a separate address for the spouse. When notices are issued to the taxpayer, the notice will be sent to both the primary and secondary addresses.
If a joint return is received less than 52 weeks after the establishment of the separate spousal address, any notices will be issued to both the primary and secondary addresses.
If a joint return is received more than 52 weeks after the spouses address was established, the address for both spouses will be updated based on the address contained on the return.
To maintain the separate spousal address, a Form 8822 will need to be filed every year.
Communication and Outreach
IMRS Issue 12-0001684 – Processing of Form 1120-H
Issue: Inquiry received from Stakeholder regarding the processing of Form 1120-H. The Form allows the preparer/taxpayer to either apply all, or a portion, of the overpayment to the subsequent year or request the overpayment be refunded. In each case where the CPA completed line 26 of the form requesting the overpayment be applied to the subsequent year, the overpayment was refunded.
Response: We researched the problem you identified and found that a programming problem caused the overpayments on Form 1120-H to be refunded rather than being applied to the subsequent year as requested by the taxpayer. The programming problem was corrected on September 30, 2012 (cycle 201241). Thank you for bringing this issue to our attention. We apologize for any inconvenience.
IMRS Issue 12-0001717 - Contact information changes for Centralized Authorization File
Issue: The CAF has changed the fax numbers used for submitting Form 2848 (Power of Attorney and Declaration of Representative) and Form 8821 (Tax Information Authorization). The new numbers are listed below.
- Memphis -- 855–214–7519
- Ogden -- 855–214–7522
The Philadelphia fax number remains the same at 267-941-1017.
Additionally, as of October 1, 2012 the CAF Help Lines were no longer operational. If you need assistance regarding a returned authorization, please call toll free at 1-800-829-1040 for individual accounts or 1-800-829-4933 for business accounts.
The CAF unit requested assistance in publicizing this information.
Response: These changes were publicized in e-News for Tax Professionals and the IMRS Hot Issues report, and via Twitter to followers of @IRStaxpros.
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.