RRCredit

[taxmandan]

Another webboard has this announcement posted from Refund Advantage:

"The IRS announced today that their systems have been overwhelmed by the large number of taxpayer who incorrectly claimed the recovery rebate credit. IRS workers have begun manually sorting through each return claiming the credit. As a result, the IRS announced it is forced to delay millions of refunds of taxpayers claiming the recovery rebate credit.

For this reason, today the IRS has asked every ERO to force the recovery rebate credit line on all Form 1040s to say zero. In other words, the IRS asks every return to indicate that the taxpayer has already received the amount of their stimulus payment last year. If your taxpayer's Form 1040 shows a value other than zero on the recovery rebate credit line of the 1040, the refund will be delayed for many weeks. The exact length of the delay has not yet been announced.

You should now make sure that the value on the recovery rebate credit line on every Form 1040 is zero. Then, the IRS will calculate whether the taxpayer is entitled to any credit and adjust the refund accordingly. The IRS says that refunds where the refund shows a zero on the recovery rebate credit line of the 1040 should not be delayed. Please note that in order to get a value of zero on the form 1040, you may have to enter that the taxpayer received the full amount of their stimulus payment last year. We will let you know as new information becomes available."

Has anyone else seen this from the IRS directly, or know where to check for such nonsense?

[Bees Knees]

There is no Refund Advantage section on the IRS website. A Google Search of Refund Advantage takes you to a bunch of RAL sites.

As far as I can tell, nothing of the sort has been posted on the IRS website or any of the IRS professional email services. Maybe something will hit later today.

If it is true, it just illustrates the stupidity of our government complicating the tax rules beyond their capability of administering them. I plan on following the rules per IRS instructions to Form 1040. How do I know whether or not IRS will pick up on the fact that my client qualifies for a rebate credit, if I file the return saying he does not?

That is just plain stupid to suggest such a thing. It sounds like a hoax to me.

[thomtax]

Cynical

I don't mean to be cynical, which I am many times, but this sounds as if the refund company is trying to do something that will make their RAL business go smoother. They are not concerned with the correctness of the return, just getting their business.

But, of course, I could be wrong.

LT

[taxmandan]

Update

I called Refund Advantage (I'm not a customer) and they said it is verbatim from a conference call this morning by the CIRCA group, apparently this is an IRS and bank industry consortium that meets to work on tax stuff. Still haven't anything from theIRS about it, have calls into the local tax practictioner coordinator.

[Jesse]

It sounds pretty hoaxie to me too. Thormax along the same line of thinking if you force zero I would bet the IRS would not catch an underpayment. An amendment would probably be necessary which of course would cost more money.

[lenboush]

This was just posted on the Drake Software forum in response to this topic:

We have been in discussions on this, and once decisions are made we will send out a broadcast email. Look for that sometime today .... I will also post that information here when I get it.
__________________
Meriah Garnett,
Drake Software EF/Banking

[dkss]

just received from crosslink

Please be sure to use the IRS website to verify the amount of Economic Recovery Credit received last year. With the install of CrossLink, a desktop shortcut was installed to assist you in navigating to the correct page on the IRS website.

When claiming the additional credit, the return will be delayed. All ERCs/RTs claiming the credit will be delayed at least 1 payment cycle.

[MariaR08]

IRS Calculating Recovery Rebate

I found this on the IRS website, they WILL do the calculation for the taxpayer if you elect so:

(here's the link) http://www.irs.gov/newsroom/article/...201641,00.html

Q. How do I get help figuring the credit?

A. The IRS will figure the credit for you, if you enter “recovery rebate credit” next to line 70 on your Form 1040 (line 42 of Form 1040A; line 9 of Form 1040EZ). You can also access the online recovery rebate tools using the recovery rebate credit link on this Web site. For taxpayers filing electronically, the software will calculate any credit they may be due.


~Maria

[taxmandan]

This from my software company

URGENT Announcement Regarding the Rebate Recovery Credit:

Effective immediately, at least one BANK will begin DENYING RAL requests
on any return with Recovery Rebate Credit.

Based on information from IRS, it is better to claim ZERO than to claim
the wrong amount. If a taxpayer claims ZERO, and is entitled to an RRC,
the IRS has indicated they will credit the taxpayer with the correct
RRC, and adjust the refund or balance due accordingly. But if they
claim the WRONG AMOUNT, then their REFUND will DEFINITELY BE DELAYED.

Based on this new information from IRS, our recommendation is to NOT
claim the RRC on any return, unless you have verified the amount of the
RRC at the IRS Website.

[Jesse]

Please be sure to use the IRS website to verify the amount of Economic Recovery Credit received last year. With the install of CrossLink, a desktop shortcut was installed to assist you in navigating to the correct page on the IRS website.

When claiming the additional credit, the return will be delayed. All ERCs/RTs claiming the credit will be delayed at least 1 payment cycle.

What is CrossLink?

[dkss]

tax prep software

crosslink is tax prep software

[Bees Knees]

Based on this new information from IRS, our recommendation is to NOT
claim the RRC on any return, unless you have verified the amount of the
RRC at the IRS Website.

OK, I am insulted. They are telling us not to prepare the return for our client the way it is supposed to be prepared, unless we are ABSOLUTELY SURE we did it correctly.

If my client is due a rebate credit, I'm preparing the return accordingly. I am pretty sure I know how to prepare correct tax returns.

[taxmandan]

OK, I am insulted. They are telling us not to prepare the return for our client the way it is supposed to be prepared, unless we are ABSOLUTELY SURE we did it correctly.

If my client is due a rebate credit, I'm preparing the return accordingly. I am pretty sure I know how to prepare correct tax returns.

Yep, the story is that the IRS has been overwhelmed with inaccurate RRC calculations so their computer can't deal with it and took a powder. My guess is that the DIY crowd using 'the box' are the likely culprits, but professionals get dragged into the whole mess too.

[Redneck]

IRS site

Picked this off the IRS website today.

"The Recovery Rebate Calculator Is Coming Soon!

We will be providing an on-line calculator to help you determine whether you qualify for this credit, and if so, how much credit you may claim on your 2008 income tax return.

We currently expect the calculator to be available in late February 2009."

Just in time.

This also.
"Q. How do I get help figuring the credit?

A. The IRS will figure the credit for you, if you enter “recovery rebate credit” next to line 70 on your Form 1040 (line 42 of Form 1040A; line 9 of Form 1040EZ). You can also access the online recovery rebate tools using the recovery rebate credit link on this Web site. For taxpayers filing electronically, the software will calculate any credit they may be due."

[powerage]

From Drake

The IRS is experiencing a high volume of e-filed tax returns claiming the recovery rebate credit (RRC) being sent for review to the IRS manual processing center. Tax returns potentially affected are those that:

1. the taxpayer received an economic stimulus payment during calendar year 2008 and
2. are claiming an additional RRC amount on the 2008 tax return that does not appear to be valid.

Customers filing BANK PRODUCTS:

Based on information released by IRS today indicating a backlog in manual processing on returns filed with the RRC, RIVER CITY will not approve a RAL with an RRC amount on it.

Effective immediately, Drake Software is STRONGLY recommending that you do NOT claim the RRC on a return filed with a bank product without checking the amount at the IRS Website first. If you are going to file a return with ANY TYPE of bank product (deposit or loan), DO NOT claim the RRC on the return. To remove the RRC from the tax return check the ‘Bypass the recovery rebate calculation’ box on the ‘RRC’ screen.

As banks make the decision to decline bank products with the RRC, we will be working to implement back end processing changes that will help prevent returns with bank products from being filed if the RRC is present, allowing you to resubmit the return without the RRC amount.

This processing backlog at IRS will definitely impact the refund deposit schedule for those returns filed with the RRC.

---------------------------------------------------

FOR ALL DRAKE SOFTWARE CUSTOMERS:


Delay in Issuing Refunds:
Returns that are sent to manual processing will experience an undetermined delay in receiving the entire refund. The IRS will validate the RRC amount claimed on the return, make any adjustments and then release the entire refund in one transaction. .

How to Avoid the Delay of the Refund:
In order to avoid a delay in receiving the entire refund the IRS is now recommending that you no longer claim the RRC on any tax returns. Our current understanding, is that this will allow the IRS to issue the amount of refund that is not a result of the RRC and the IRS will then calculate any amount of RRC that the taxpayer is due and send it to them in a separate transaction.

Based on this new information from IRS, our recommendation is to NOT claim the RRC on any return, unless you have verified the amount of the RRC at the IRS Website.

From the IRS: Most taxpayers who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.