IMRS Monthly Overview – October 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
Policy, Practice, Procedures
IMRS Issue 13-0001720 – Proper Handling of Sale of Residence
Issue: Practitioner reports receipt of at least 4 IRS notices (CP2501) in the past few months requesting his clients report real estate sales on their former main homes from the 2009 and 2010 tax years. IRS bases this request on the receipt of Forms 1099-S. While the IRS changed the Sch. D instructions for the 2011 tax year to report these sales if there is a 1099-S, this was not true in 2009 and 2010. For 2009 and 2010 the IRS Schedule D instructions state to report the sale of a main home only there is gain that cannot be excluded. Practitioner asks if the 2009/2010 Schedule D instructions are in conflict with the Automated Under Reporter procedures regarding the sale of a home and the issuance of Form 1099-S.
IMRS Issue 12-0001719 – CP2000 Notices for Self-Employment Tax
Issue: Taxpayers are receiving CP-2000 notices for self-employment tax imposed on amounts shown on line 21 of Form 1040, regardless of the source of the income.
Forms, Publications and Products
IMRS Issue 13-0001722 – Missing Names on Notices
Issue: Practitioner is receiving AUR closing Notices (CP 2005) for clients where the SSN of the client/taxpayer is indicated but the name of the client/taxpayer is not. The representative cannot determine which client the letter applies to since there is no ‘field’ for the name of the client/taxpayer on the CP 2005. Practitioner would like to know why the CP 2005 does not specify the name of the taxpayer.
RECENTLY CLOSED ISSUES
Policy, Practice, Procedures
IMRS Issue # 12-0001597 – Invalid Return Address on IRS notices
Issue: Taxpayer received LTR 4115C - Information Regarding Your Refund requesting that documentation be sent to the IRS “within 30 days from the date of this letter to the address shown at the top of the first page of this letter." When the practitioner sent back the requested information, the Post Office returned the letter “UNDELIVERABLE AS ADDRESSED FORWARDING ORDER EXPIRED.” The practitioner then called the PPS and they could not give her a good address. Practitioner requests IRS revise the Letter 4115C to include corrected mailing address including alternative methods of mailing.
Response: The determination to send a 4115C letter is made by an individual employee while working a case. The employee manually enters some data to complete the letter content, including selection of codes to generate the return address. Because the letter is used nationally there are a variety of different addresses that can be generated. In this instance the employee made an error while preparing the letter which resulted in selection of the wrong address code. A new letter is not needed since the 4115C letter includes a toll free number to call if there are questions. When calling this number the taxpayer should reference that they received a 4115C letter; this will enable the IRS employee to research on that issue and provide guidance to aid the caller. We are updating IRM guidance to better serve taxpayers who call because their 4115C letter response was returned as Undeliverable. An alert will also be issued to impacted staff to inform them of the guidance update.
IMRS Issue 12-0001531 – Prohibited Practitioner Advertising
Issue: Practitioner advertising is prohibited on Forms W-2 and other information returns (reference Rev Proc 2011-62 and Publication 1141), but are there restrictions on including practitioner advertising with Forms W-2 and other information returns?
Response: No additional enclosures, such as advertising, promotional material, or a quarterly or annual report, are permitted. Even a sentence or two on the year-end statement describing new services offered by the payer is not permitted. Logos, slogans and advertising may be used on any permissible enclosure such as a check or account statement, other than information returns and payee copies. See the general instructions of the information return for a list of permissible enclosures.
As indicated in Sections 1.3.1 and 5.1.3, of this revenue procedure, Forms 1096, 1097-BTC, 1098, 1099, 3921, 3922, 5498, W-2G, 1042-S, and 8935 are subject to annual review and possible change. If you have comments about the restrictions on including logos, slogans, and advertising on information returns and payee copies, send or email your comments to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:T:M:S, 1111 Constitution Avenue, NW, Room 6526, Washington, DC 20224 or substitute firstname.lastname@example.org
Forms, Publications and Products
IMRS Issue 12-0001535 – Internal Revenue Code on IRS.gov
Issue: Practitioner organization would like to know why the IRS can’t post current IRC sections on IRS.gov or use a sponsor that would be willing to post current IRC sections. Presently, users are redirected to a third party website.
Response: The IRS provides the public free linked access for the Internal Revenue Code through the site maintained by Cornell University. Through this site, the public may access a current electronic version of the IRC. As of August 9, this site was current for legislation up to May 2012. The Cornell link provided by the IRS also provides access to pending legislation in the current Congressional session, as well as the Thomas legislative research site. Similarly, the IRS links to the Government Printing Office for access to the Treasury regulations (26 C.F.R.), which pick up where the Internal Revenue Code (IRC) leaves off by providing the official interpretation of the IRC by the U.S. Department of the Treasury. As a result, this provides access to very current legislative information.
Even in this electronic age, it takes time to post updates to versions of the Code, whether electronic or in hard copy. The Cornell University link does an effective job of helping the public to remain informed of, and have access to, a very current resource for tax laws and there does not seem to be any value in the Service attempting to duplicate the free Service provided by the Cornell University link.
Communication and Outreach
IMRS Issue 12-0001545 - Request for a Spanish webinar on self-employed tax information
Issue: IRS Stakeholder Liaison requests a Spanish language version of the 3/29/2011 webinar: Business Taxes for the Self-Employed: The Basics.
Response: The Spanish version of the Business Taxes for the Self-Employed: The Basics (Impuestos de Negocio para Empleados por Cuenta Propia) was held live on Wednesday, September 26, 2012. It is now archived in English and Spanish on the IRS Video Portal.
The Spanish version of the webinar is now available to view on the IRS Video Portal at: http://www.irsvideos.gov/ImpuestosdeNegocioparaEmpleados/.
The English version of the webinar is available to view on the IRS Video Portal at: http://www.irsvideos.gov/BusinessTaxesSelfEmployedTheBasics/
Some of the topics covered by the webinar included reporting profit or loss from a business or profession, self-employment tax and estimated tax payments, schedule C and C-EZ, deducting Business Expenses, husband and wife businesses, and recordkeeping.
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.