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IMRS Monthly Overview – January 2016

The IMRS Monthly Overview provides synopses of some of the issues received and/or closed by the Issue Management Resolution System staff during the past month. The Monthly Overview informs the public about the work of IMRS and highlights the issues that we think would be of most interest to external stakeholders

Recently Closed Issues

Policy, Practice, Procedures

IMRS Issue 15-0002030 - Notification of Possible Income Underreporting

Issue: Practitioners received notices for their businesses indicating they were not reporting all check and cash payments. They accept credit cards and run checks through TeleCheck Service which issues a Form 1099-K because the payments go through ACH. As a result, almost all of the payments they receive are reported on Forms 1099-K. They receive one Form 1099-K for credit card payments and a second for check payments.  If an IRS employee had viewed their Forms 1099s, they would have seen that the TeleCheck Service payments were their check receipts. The practitioners believe IRS needs to reprogram its system to recognize that TeleCheck Services reported on a Form 1099-K are payments made by check. By not sending these notices for response, the Service and business owner would save time and money.

Response:  The IRS recognizes the reporting of various electronic payment transactions on Forms 1099-K including electronic check conversions. The IRS is continually evaluating payments reported on Forms 1099-K and looking at new ways to use this data. The IRS appreciates the suggestion and will strive to identify payment transactions properly to minimize burden on taxpayers and the Service.

IMRS Issue 16-0002080 – Request to Consolidate Installment Agreement Forms

Issue: Practitioners believe that installment agreement Forms 9465 and 433-D are practically identical and the IRS should consolidate them to reduce burden. The request stemmed from the submission of Form 9645 to the campus which resulted in an increased monthly payment determination or need to submit a Form 433-D to show a change from the original Form 9645.

Response: Thank you for your suggestion to consolidate these installment agreement forms.

Although taxpayers use both Forms 9465, Request for Installment Agreement, and 433-D, Installment Agreement, to establish installment agreements, the forms are not interchangeable.

Taxpayers can file Form 9465 separately or attach it to Form 1040 to request an installment agreement when they file their income tax returns. Some automated processes associated with the Form 9465 aid in expedited installment agreements meeting guaranteed or streamlined installment agreement criteria. 

Occasionally, a taxpayer will file Form 9465 or Form 433-D to request an installment agreement that  does not meet guaranteed or streamlined criteria because of the amount of the liability, the amount of the proposed monthly payment or the types of tax involved. When this occurs, the Service will send the taxpayer a letter:

  • Advising of the monthly payment amount required to meet guaranteed or streamlined criteria
  • Requesting a completed collection information statement based on the amount or type of tax liability

The taxpayer may choose to complete the collection information statement to provide the necessary information for the Service to consider the installment agreement as requested on the previously provided Form 9465.

Alternatively, if the taxpayer agrees to the monthly payment amount mentioned in the letter, they may complete the blank Form 433-D. Doing this amends their installment agreement proposal to the higher monthly payment amount required to meet guaranteed or streamlined criteria.

If the taxpayer owes $50,000 or less and their proposal meets streamlined criteria, tax practitioners or their clients also have the option to request an installment agreement using the Online Payment Agreement application.

The IRS appreciates the suggestion and has given it careful consideration but determined the current processes best serve the taxpayer and the Service to establish installment agreements efficiently

IMRS Issue 13-0001826 – Alternative Transcripts

Issue: Taxpayers request tax return transcripts for a number of reasons, including verification of their income to mortgage lenders for loan applications. Some lenders prefer a particular type of transcript that may not be available.

Response: A tax return must be processed before we can issue a tax return transcript. The time frame in which a return is processed depends on many factors, including when a taxpayer files the return, whether the taxpayer files the return on paper or electronically, and if there is a balance due on the return.

Issues with processing the tax return could prevent an IRS assistor from generating a tax return transcript through the Transcript Delivery System (TDS). Some taxpayer accounts affected by identity theft also prevent an IRS assistor from generating a tax return transcript through TDS. For these situations, IRS assistors will provide a Tax Return Database (TRDBV) transcript through the Database account file instead of through TDS.

TRDBV transcripts look different from the tax return transcript generated through TDS. Some TRDBV transcripts will not contain the name, address and filing status of the taxpayer as recorded on Form 1040/A/EZ. However, the TRDBV transcript will contain the social security number of the primary taxpayer at the top of the transcript page and all of the information recorded by IRS from the tax return submitted by the taxpayer. Providing taxpayers with a TRDBV transcript ensures they receive the correct tax return information.

The TRDBV transcript is not generated on IRS letterhead nor accompanied by a cover letter. It is not date-stamped by the IRS. A date stamp does not change the validity of the transcript.  

In addition to the TRDBV transcript, a second, alternate transcript is Letter 3538. This is a verification of non-filing letter. Letter 3538 is provided to victims of identity theft by an IRS assistor when they need confirmation that IRS has not received a tax return at the time the request was made.   

Effective January 10, 2014, Title 12 of the Code of Federal Regulations (12 CFR § 1026.43(c)(4)), allows mortgage companies and other lenders requiring proof of income to use earning statements and other financial records from the taxpayer in lieu of a tax return transcript. Income Verification Express Service is a means to obtain these documents.

NOTE: The IRS also provides current and previous reports on this site. 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.

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Page Last Reviewed or Updated: 25-May-2016