Error Correction

[Snaggletooth]

Fresh back from four days of CPE seminars.

The most prodigious thing learned? NOL carrybacks? No. First-time homebuyer credits? No.

Get ready for this (and I'll just quote from the text of the material, which was confirmed by both instructors):

..."The IRS may assess additional tax without issuing a notice of deficiency in four circumstances related to the homebuyer credit:
1. Information provided by the entity that issued the individual's taxpayer identification number (TIN) indicates that the taxpayer does not meet the age requirement for the credit.
2. Information provided by the taxpayer on an income tax return for at least 1 of the 2 preceding tax years is inconsistent with eligibility for the credit.
3. The taxpayer fails to attach to the return a properly executed copy of the settlement statement used to complete the purchase.
4. The taxpayer omits from the return any tax required by the recapture provisions."

In other words your client has a $6000 refund coming as a result of the FTHC. IRS shortchanges the refund to $5366 without sending any explanation whatsoever.

The seminar had a guest speaker from the Taxpayer Advocate Office. I brought this to her attention and she was horrified. She saw this as being a train wreck for her office. When she left she said she was going to lodge a complaint and "run it up the ladder."

Interesting...

[dsi]

Wonderful...just wonderful!

[Nashville]

Bump

I'm going to bump this thing back up to the top so the Monday-Friday folks can look at it.

I think the subject matter deserves a [better, worse](choose one) fate than it got.

[erchess]

Too Stunned

I was too stunned for words this weekend. I don't object to the taxing agency deciding that there is a problem with the return and holding some or all of the refund but I think they should be required to send the taxpayer a notice of what they did and why so that the taxpayer can have the right to challenge the decision through internal channels and then the courts. I don't know if they still will do this but in the old days if the NCDOR official who opened your amended return which asked for a further refund felt that your explanation was un-persuasive (usually because you didn't show your math from the beginning of the return like a third grader's homework) then the return was filed in a drawer and no further action was taken unless you called in and asked what the problem was.

I keep reminding myself that as a group taxing agency employees are no better and no worse than tax professionals but the policies of taxing agencies too often make me furious.

[CinSee]

While I can understand the reasoning behind this (to a point) this will be a disaster for all.

Do you have anything that we can read through on this?

[Snaggletooth]

N C State

Hi CinSee -

the verbage as I related in the original post came from Seminar material from North Carolina State Univ. There was no citation given -- this type of thing springs from IRS internal policies and not from code or regs. It wouldn't even appear in an audit guide.

The TAO representative I talked to was livid, because she hadn't been informed until the seminar (where she was a guest speaker). People within the IRS that see the folly are the best hope to get it changed.

[Black Bart]

While

Fresh back from four days of CPE seminars.

The most prodigious thing learned? NOL carrybacks? No. First-time homebuyer credits? No.

Get ready for this (and I'll just quote from the text of the material, which was confirmed by both instructors):

..."The IRS may assess additional tax without issuing a notice of deficiency in four circumstances related to the homebuyer credit:
1. Information provided by the entity that issued the individual's taxpayer identification number (TIN) indicates that the taxpayer does not meet the age requirement for the credit.
2. Information provided by the taxpayer on an income tax return for at least 1 of the 2 preceding tax years is inconsistent with eligibility for the credit.
3. The taxpayer fails to attach to the return a properly executed copy of the settlement statement used to complete the purchase.
4. The taxpayer omits from the return any tax required by the recapture provisions."

In other words your client has a $6000 refund coming as a result of the FTHC. IRS shortchanges the refund to $5366 without sending any explanation whatsoever.

The seminar had a guest speaker from the Taxpayer Advocate Office. I brought this to her attention and she was horrified. She saw this as being a train wreck for her office. When she left she said she was going to lodge a complaint and "run it up the ladder."

Interesting...

the IRS speaker at my recent tax seminar failed to mention these FTHB penalties you list, I am much comforted by his request that if we had problems -- any problems at all -- why then, just send him an email and the complaint would be forwarded to the proper authority. I'm fully confident that such unpleasant matters will be dealt with promptly.