Corporate Matching Program

[Snaggletooth]

This week's NATP journal has a blurb about the IRS beginning a program where Corporate tax returns will be matched with information returns. Quoting the article, "Later this summer, the IRS will issue approximately 500 CP2030 notices to Form 1120 taxpayers that will notify them that the information the IRS has does not match what was reported to the IRS."

Just how effective is this going to be? Payers sending information returns are in general exempt from having to send them to corporations. Don't know about banks for 1099-INT, 1099-DIV but I have a few 1120 corporate customers, and none of them are receiving 1099s. Some corporations are receiving 1099s for payments from government agencies, but I don't think there is a requirement for this.

Am I missing the point? Is there a series of information returns common to corporations that I don't know about?

[BHoffman]

I've always wondered whether the IRS has a way to actually match payroll forms (W3, etc) to what is reported on an 1120 for payroll expense.

I'm also not sure how diligent or able (with their limited resources) they are about matching what appears on a K1 to what appears on the partner/shareholder's 1040.

[erchess]

I think

that they should have the computer resources to match everything. But then I, despite the impact it would have on me personally, think that what we should have is money that exists only in electronic format, the death penalty for all parties involved in barter, and a flat rate deducted every time money changes hands including moves between say my bank account and my stock account.

[Black Bart]

Job-seeker?

...we should have...money that exists only in electronic format, the death penalty for all parties involved in barter, and a flat rate deducted every time money changes hands...

At this very moment, Presidente-for-Life Ahmadinejad is looking for an assistant holding just such views.

[Black Bart]

Something in the works alright...

This week's NATP journal has a blurb about the IRS beginning a program where Corporate tax returns will be matched with information returns. Quoting the article, "Later this summer, the IRS will issue approximately 500 CP2030 notices to Form 1120 taxpayers that will notify them that the information the IRS has does not match what was reported to the IRS."

Just how effective is this going to be? Payers sending information returns are in general exempt from having to send them to corporations. Don't know about banks for 1099-INT, 1099-DIV but I have a few 1120 corporate customers, and none of them are receiving 1099s. Some corporations are receiving 1099s for payments from government agencies, but I don't think there is a requirement for this.

Am I missing the point? Is there a series of information returns common to corporations that I don't know about?

Obama worked up a corporate 1099 proposal in May, but I don't how/where/if it's coming along. Here it is: (You owe me five bucks for typing the link -- it's much longer than what shows on the screen)

http://74.125.95.132/search?q=cache:...s/Tax_proposal...

The "500 CP2030 notices" sounds like a pilot program, doesn't it" The proposed legislation sets Jan-2010 as the starting date.

[Black Bart]

Don't know about 1120, but

I've always wondered whether the IRS has a way to actually match payroll forms (W3, etc) to what is reported on an 1120 for payroll expense...

I know they once did check a 1040 (either C or F/don't remember which) against the W-3. A client brought in an IRS letter stating return wages/labor did not correspond to reports filed. This was at least 15-20 years ago and I worried for a long time, but never saw another one. The client received no more letters, no bills, and was not audited. Eventually I assumed it was just a test/pilot program that didn't work out.

Anybody else know of one?

[Jiggers]

IRS & Corporate Matching

What about fiscal year taxpayers?

I did have a corporate client audited a few years back.

Auditor spent two days going through everything, including corporate minutes. Couldn't find anything.

Then he asked about a 1099-B from a brokerage house showing $100,000 in sales and there was no $100,000 sales on the corporation's Schedule D.

And this was a fiscal year corporation.

What was on the 1099-B was a $100,000 CD that was cashed in by the brokerage house, for the prior year.

I didn't show it on the the Schedule D for the prior year either.

I don't reconcile 1099's for corporations, especially fiscal year corporations.

I did show the auditor that the funds were booked in the general ledger as a trasfer from the CD G/L account to the Checking G/L account.

Issued a no change audit.

But it did cost my client for two days of sitting with the auditor answering questions and getting the answers to various questions.

[joanmcq]

K-1s have been matched against individual returns for about 5 years now. working on an audit of one issued by a trust as we speak.