NEW IMRS ISSUES
E-Services
IMRS 08-0000821 – Error Messages in E-Services
Issue: Practitioner would like the IRS to provide clearer error messages when attempting to log on E-Services. Error messages should indicate if the problem is with the password or login as opposed to both possibilities.
IMRS 08-0000816 & 814 – Links from E-Services
Issue: Practitioners request links in E-Services to research tax law, and to access the Issue Management Resolution System, the Tax Professional Corner and the password management page.
IMRS 08-0000797 – e-Help Desk Message
Issue: Practitioner requests that the e-Help desk answering message be changed and shortened during the filing season to save callers’ time.
Forms, Publications, Products
IMRS 08-0000817 – Form 1041, U.S. Income Tax Return for Estates & Trusts
Issue: Practitioner advises there are no instructions for sending a paper payment when Form 1041 is filed electronically.
IMRS 08-0000800 – Description of Occupations
Issue: Practitioner suggests the IRS provide a description of occupations along with corresponding codes on Form 1040, similar to industry codes on Schedule C.
IMRS 08-0000799 – Schedule C, Profit or Loss from Business (Sole Proprietorship)
Issue: Practitioner suggests the IRS expand the income reporting part of Schedule C for fuller disclosure.
Policy & Procedure
IMRS 08-0000809 – Form 1099, Information Return
Issue: Enrolled Agents would like to know if the IRS has granted extensions to brokerage houses to submit Form 1099s.
IMRS 08-0000807 – Exempt Organization Help Desk
Issue: Practitioner states the wait time for the Exempt Organization Help Desk is excessive and the level of service needs improvement.
IMRS 08-0000806 – Levies
Issue: Business received LP-68 releasing levy. However, no paper levy or phone levy was ever received. Therefore, the business did not submit any funds owed the taxpayer to the IRS but sent funds directly to the taxpayer. Had the levy not been released, business feels they may have been unduly subject to penalties.
IMRS 08-0000803 – W-2
Issue: Practitioner suggests that since Social Security allows taxpayers and CPAs to generate and submit W-2s online, the IRS should copy Social Security’s W-2 Web code and convert it to 1099 Miscellaneous for online submission by small businesses and CPAs.
IMRS 08-0000798 – Charitable Contributions
Issue: Practitioner suggests exempt organizations be required to include their FEIN on receipts and that the IRS add the ability to search by FEIN on IRS.gov to ensure the organizations qualify to be an exempt organization.
IMRS 08-0000792 – Earned Income Tax Credit & Exemptions
Issue: Practitioner advises that parents authorized to claim child’s exemption/EITC must provide evidence of their right to claim each year due to unauthorized claim by other parent filing first. Practitioner suggests the unauthorized parent’s account be coded to require verification of right to claim in subsequent years.
IMRS 08-0000791 – Employer Identification Number
Issue: Enrolled Agent advises the IRS will not issue his client another EIN for his second company because he already has two EINS.
IMRS 08-0000789 – Notices for Late Filing
Issue: CPA advises several of his clients erroneously received IRS notices for late filing on personal returns even though a properly filed extension was submitted. Clients had a balance due with the extension but did not send a payment.
IMRS 08-0000788 – Notices for Payment
Issue: CPA advises he received billing notices before payments were posted for returns he filed electronically October 15 where the payments were mailed the same day.
RECENTLY CLOSED ISSUES
Communication & Outreach
IMRS 07-0000637 – SS-4, Application for Employer Identification Number
Issue: Taxpayers and practitioners request clarified instructions on how to complete Form SS-4 for employment tax requirements for a Single Member LLC that is a disregarded entity.
Response: Further Frequently Asked Questions and information will be developed and posted to IRS.gov after Filing Season 2008 since changes affect wages paid beginning 1/2009.
E-Services
IMRS 08-0000713 – Online EIN
Issue: Practitioners report the new online EIN process is burdensome as it will not allow them to change a client’s status from a corporation to an LLC. Practitioners also feel the new process is slower.
Response: During the two years spent developing the new online EIN application, the agency was assured that the regulations that required a single-member LLC (SMLLC) to have two EINS if they will have employees (one for the owner and one for the LLC) were going to be replaced with new regs effective 1/1/2008. In July 2007, we were informed the new regs would not be effective until 1/1/2009. The new regs will treat the SMLLC as a separate entity for employment tax purposes and will negate the requirement that two EINs be assigned. We immediately began work to build the functionality to allow these customers to get both EINs online; this piece of the application is scheduled to deploy on February 25, 2008. Until then, SMLLCs who will have employees must use our other methods (phone, fax, or mail) to get the two required EINs.
Other features of the new application have been working extremely well. In addition to the new customer interface, which works like many of the popular tax preparation software programs on the market, we now have real-time functionality so all information is validated during the online session and the EIN the taxpayer receives is no longer considered provisional, but is their permanent number. Since 9/17/07, we have assigned over 625,000 EINs online. About 1 in 40 taxpayers who receive an EIN online get a survey with seven questions asking about their experience using the application. The results of the survey have been overwhelmingly positive. While we appreciate that some of our customer base, particularly tax professionals who were comfortable with the PDF-like Form SS-4, may feel the new application is more cumbersome, our reports show that the average session time for all applications submitted since September 17, 2007 is 12 minutes, 27 seconds. This figure includes those who only use the application one time for their own EIN and for tax professionals who use the application regularly. Regular users should be able to complete the application in substantially less time than other users. There are no plans at this time to build a separate interface for tax professionals.
Forms, Publications, Products
IMRS 08-0000796 – CP250C, You are No Longer Eligible to File Form 944
Issue: Stakeholder advises that some notices were printed with the wrong year. The erroneous notices show a tax period ending December 31, 2007 rather than December 31, 2006.
Response: Some notices were printed with the incorrect date. Apology letters were mailed to those who received the incorrect information. If you received a notice and need assistance or clarification, please use the contact number listed at the top right-hand corner of the notice. We apologize for this inconvenience.
IMRS 08-0000790 – Form 941, Employer’s Quarterly Federal Tax Return
Issue: Stakeholder advises Form 941 and other business tax return mailings may not be mailed to taxpayers if they did not use their packages the prior year/quarter.
Response: As part of our efforts to eliminate mailings, packages were not sent to those who used Reporting Agents, those who filed electronically and those who used a preparer. This resulted in just a slight decrease in our mailings. Before that, IRS mailed a postcard to filers of 1120, 1120S & 1065 telling the filer to return the postcard if they wanted to continue to be on the mailing list. These cuts were substantial, but our “request file” has not been updated in several years. Last year the IRS began coding all business returns that have identifying numbers that tell the source of the filed form. In other words, we can tell whether or not someone used an IRS tax package. Based on 941 pre-testing, the drop in volume is dramatic. Specifically, 5.5 million 941 packages were mailed for the fourth quarter of 2007, but only 1.5 million were used. Therefore, only 1.5 million 941 packages will be sent out in the first quarter of 2008. This is why some of your clients may not get a business tax form this year. All forms can be downloaded from IRS.gov.
IMRS 08-0000768 – Form 4136, Credit for Federal Tax Paid on Fuels
Issue: Practitioners would like to know when Form 4136 will be available for e-filing.
Response: Agricultural industry taxpayers, farmers and fishermen who electronically file Form 1040 returns with Form 4136 must wait until March 3 to e-file the newly revised Form 4136. Normally 1040 filers who qualify for the special estimated tax rules that apply to farmers and fishermen must file their 2007 return and pay all taxes due by March 3. Returns for eligible farmers and fishermen who attach Form 4136 to an electronically filed Form 1040 will be considered timely if e-filed on/or before March 10. This delay does not affect farmers and fishermen who are not attaching Form 4136. Form 4136 has been updated to reflect changes relating to the Leaking Underground Storage Tank tax, which were enacted as part of the Tax Technical Corrections Act of 2007, Pub. L. 110-172 Section 6, Provision 1362, on December 29, 2007. The late December enactment means that reporting procedures for this law change were not incorporated into tax preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 4136. The IRS is now updating its systems and expects to begin accepting electronically filed returns that include Form 4136 by March 3. The paper Form 4136 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically since it greatly reduces errors and speeds refunds. Publication 505, Tax Withholding and Estimated Tax, has more information on the special estimated tax rules for farmers and fishermen.
IMRS 08-0000746 – CP80, Reminder – We Have Not Received Your Return
Issue: Practitioner advises that a taxpayer received a CP80 addressed to a deceased taxpayer and spouse even though the return was filed with surviving spouse as primary taxpayer. Practitioner feels the IRS should not contact the surviving spouse looking for a return without researching the other TIN.
Response: The CP80 generates when a module has a credit balance and no return. We make no systemic checks against other taxpayer identification numbers prior to mailing the CP80. We have identified this issue as a possible future improvement in our continuing computer modernization efforts, although it will not be considered for implementation until after 2009. Surviving spouses constitute a small segment of all the taxpayers who receive a CP80 from IRS. At this time there are no plans to change the wording of the CP80 to address surviving spouses who may have filed returns.
IMRS 08-0000690 – Form 2848, Power of Attorney and Declaration of Representative
Issue: Licensed Public Accounts are unsure of which designation they should use when completing Form 2848.
Response: The Office of Professional Responsibility (OPR) has identified some states where Licensed Public Accountants (LPAs) are given representation privileges equivalent to Certified Public Accountants (CPAs) in regard to practice before the IRS. LPAs in these states can file third party authorization Forms 2848 or 8821 and claim CPA authority. However, they must include an asterisk next to the designation level indicating that they are an LPA and not CPA. As a result, the LPA will have the same authority as a CPA for the issues at hand. At this time, IRS recognizes public accountants from the following states as authorized representatives: AL, AK, AR, CA, CO, CT, HI, ID, MT, NH, NJ, NY, ND, OH, PA, RI, SD, TN, VT, WV.
Policy & Procedure
IMRS 08-0000804 – High-Dollar Unit
Issue: Practitioners are frustrated with the time it takes to get through to the high-dollar unit with a Collection issue. They suggest ensuring the telephone numbers on the notices are completely accurate and include instructions to specifically ask for a specific extension or for the high-dollar unit and setting up two direct telephone numbers for two high-dollar units.
Response: The regular ACS toll-free number is included on all notices. On the primary Accounts Management toll-free lines which include PPS, Wage & Investment and Small Business ACS toll-free numbers, we request the customer’s TIN. The TIN is then confirmed and the call routed based on the master file findings. Large Dollar has its own identification criteria and routing plan, which should result in the call going directly to agents in Brookhaven and Buffalo. IRS has contingency plans to address situations where the TIN is not entered or a system failure occurs. These contingency plans include routing the calls to our general pool or resources. If the assistor determines the call is a large dollar case, he or she will manually transfer the call to get it to the large dollar agents. It’s important to realize, however, that in this situation the caller will first queue for the general pool, speak with an agent and be manually transferred.
IMRS 08-0000757 – e-Post Cards (Form 990-N)
Issue: Stakeholder reports they are unable to file the e-post card as their EINs have been cancelled.
Response: The IRS does not “cancel” EINs. It is likely that it was the organization’s exempt status that was “cancelled”. If the parent deletes them from the listing provided during the supplemental group ruling information process, or never includes them, then they will not show up as exempt on the Business Master File (BMF). If these organizations have tried to file an e-post card and failed, they need to go through Customer Accounts Services (CAS) ((877) 829-5500). We have established a process to handle exempt organizations that have fallen off the Master File. They should not request a new EIN. In this instance, the taxpayer is definitely part of a group ruling but, based on their Web site, they do not include all of their subs, many of whom do not have EINs. Apparently, the parent organization does not require subs to get an EIN unless there is money involved.
IN PROCESS ISSUES
Forms, Publications, Products
IMRS 08-0000731 – Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return
Issue: Practitioners would like to use Form 8453 to submit a copy of the 83(b) election required as an attachment to the return.
Status: A response provided by W&I has been shared with the practitioner. The issue will be closed when receipt is confirmed.
*This is a sample, not a complete list, of “In Process” issues currently being worked.
NOTE: Current and previous reports can be accessed from the Tax Professionals page on IRS.gov. (The Monthly Overviews are posted for the periods May 2006 through the current month. You can also access the 2006 Closed Issues Sorted by Subject report on the same page.) We invite you to raise your issues/concerns with your local liaison representative. A listing of Stakeholder Liaison (SL) Local Contacts can be found at IRS.gov, keywords “Stakeholder Liaison (SL) Local Contacts,” or follow the link on the IMRS page. This list is also available for downloading.
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