Recovery Rebate Credit

[erchess]

Just before the deadline I prepared a 1040 for a client who said that he had done his own extension. He said that he had done the same thing with his 07 return except that instead of using me he had used one of the big box outfits. He said that he had not gotten a stimulus payment and since that fit with my understanding of what should have happened given his late filing, I told Drake Software that he had received nothing and it calculated that he was due $600. That seemed correct to me so that's what I filed. The IRS has disallowed the $600 and sent a CP notice to the effect that the amount is disallowed because it was calculated incorrectly. Before we call in for more details I'd like input from this board.

You don't forfeit the credit by filing late as long as you are within the three year sol do you? Would it matter if he didn't for some reason have his extension credited to him?

In the scenario he outlined for 07 would he have gotten a stimulus check?

Assuming for the moment that he's wrong and the got a check and cashed or deposited it, how hard will it be to get the IRS to give us proof of that?

Assuming for the moment that his check was generated but somehow cashed by someone else or it never reached him for whatever reason and was not cashed at all, how much of a hassle are we looking at to get a new check?

By the way he's not upset he just wants to make sure that in the end he either gets his $600 or has a clear understanding of why he's not entitled to it under the law. For instance if he's wrong and did get a stimulus check he already knows that would mean he doesn't get the credit. And yes he is rich enough that I can believe he would forget receiving a $600 check or even get it and forget to deposit it.

[spanel]

https://sa2.www4.irs.gov/irfof/IRServlet?app=IRACTC&selectLanguage=en

How much does it show??

Chris

[erchess]

It shows

that they got $600. That's useful to know and is obviously what the IRS is claiming in this case, so thank you Chris. What I want to know now is whether the taxpayer has the right to ask for a copy of the canceled check and if so how we go about that. Put another way, what is the procedure for asserting that the IRS record is in error?

[Black Bart]

Previous payment

Google up form 3911 "Taxpayer Statement Regarding Refund" and that'll get you started. Mailing address is on the form. I don't think they send you an actual copy but just list the pertinent info off the check onto this form.

I once did this but it's been so many, many moons ago that, while I don't remember much of anything about it or how it came out, I do recall that it was a hassle (for me, not the client).

Get your timesheet/fee setup understood in advance 'cause clients like this feel there's nothing to lose (except your time and trouble) and are quite cheerily willing to have you move heaven and earth to unearth the truth (that they DID get the check). In the end the response will likely be "Oh...oh....yeahhhh...now that you mention it, it does seem like I might have gotten a check...." In the circumstances you describe, I'd bet a hundred bucks he got it.

Re SOL -- I've filed some late and they got the refunds just like an ordinary refund within statute period.

When the IRS CPs say those are being disallowed because it was "calculated incorrectly" I think they mean it in the sense that they're calling it a math error -- that it's "incorrect" simply because he got the money previously and you're listing (calculating) it on the 1040 to be received again. Normal people (anybody other than government) would, of course, simply say it was paid previously rather than imply you figured it wrong.

This kind of stuff is 99% "all for nothing." It's like those clients who say "I don't have/can't find/didn't get a copy of my tax return -- how about running one off for me?" If you delay or say it'll cost X dollars fee, half of them will go home and do what they didn't want to do in the first place (dig through the chest of drawers until they find it).

[S T]

Chances Are

Oh that is a "Johnny Mathias" recording sorry - just watched him on TV

However, chances are your client received the check and just doesn't remember. I had a lot of those clients that didn't remember receiving the check in 2008 for the 2007 tax filings, but we found the deposits (after a lot of searching) when I filed the 2008 tax filings this year

Maybe have the tax client review their deposits into their bank account, but of course if it was multiple checks on one deposit on one day - probably can not be readily discerned.

If your T/p had a refund on 2007 with a direct deposit indicator on the 2007 return - that would make searching a "little" easier.

Good Luck!

Sandy

[erchess]

Thank You

to all who responded.

BB Form 3911 is clearly designed to have the top part filled out by the Service and then be mailed to a taxpayer who has written to ask about a refund not received.

BB & ST I completely agree that the most likely situation is that he received and cashed the check. The deal I have with him is that right this weekend he has other fish to fry but by the end of this coming week he is going to search his bank records and get back to me. I don't charge for off season work on a return I prepared for fee unless there is an audit. I do keep track of the hours and add something to the strictly forms charge when I do their return for the next year.

So anyway if it comes to this I will write a letter to the IRS at the address to which we would have mailed a paper return and see what happens.