Delays of FTHB refund

[Black Bart]

Last three clients I've filed are apparently mired in IRS bureaucratic molasses -- it's like pullin' teeth to get the refund. Takes months....

One built/paid for his own house -- no HUD statement exists. In such cases they ask for a "certificate of occupancy;" unfortunately those animals are also non-existent here in hayseed territory.

Sent everything in the world previously -- cover letter explaining no HUD/no certificate, driver's license w/new address, builder's risk insurance, homeowner's policy, all utility records (disconnects plus reconnects), postmaster's affadavit of change of address, auto registration, bank statements, favorite ice cream flavor, color of drawers. Client brings in IRS letter yesterday; "Please send Form HUD-1...For a newly constructed home see Form 5405 instructions..." (that is, a "certificate of occupancy").

First, the urge to kill, then reason prevails and I call "problems" number (800-438-1992/Ext. 462). Knowledgeable agent says they probably ignored the stuff, fax it all in again, wait a month and call -- although probably nothing will have been done since Kansas City office (my letter's origin) is 15,000 FTHB cases behind and some of their fax machines burned up from overwhelming volume. Says just keep trying.

Interesting guy/conversation -- said IRS had not been prepared for the volume/problems of forms L, M, and 5405 and they're now simply processing the M "as IRS records" reflect it should be regardless of what the tax preparer files; that filers will have to hash out the differences later. Also noteworthy, he advised filing amended FTHB returns because his section (problem res) handles those and are generally more knowledgeable than the regular troops. I pointed out that 1040X usually adds three months or so to turn-around time and he countered that regular processing is taking that much anyway. True; my guy's stuff is two months old and I'm anticipating another two.

Anyway, just venting. Anybody else got an axe to grind?

[Burke]

Interesting guy/conversation -- said IRS had not been prepared for the volume/problems of forms L, M, and 5405 and they're now simply processing the M "as IRS records" reflect it should be regardless of what the tax preparer files; that filers will have to hash out the differences later. Also noteworthy, he advised filing amended FTHB returns because his section (problem res) handles those and are generally more knowledgeable than the regular troops. I pointed out that 1040X usually adds three months or so to turn-around time and he countered that regular processing is taking that much anyway. True; my guy's stuff is two months old and I'm anticipating another two.

Anyway, just venting. Anybody else got an axe to grind?

Well, it gives me a little more insight to my "M" errors. I posted earlier about resolution time but no responses yet. Wondered how others are faring. Would be interested in how to go about "hashing out the differences." Phone or letter, and forget about 1040X?

[rjholmes]

Your guy's stuff is ONLY 2 months old?

Mine finally got her check yesterday. It was first filed in November, a true first-time home owner. She sent copies of everything that we thought would suffice. Her first letter asked for those same things that we originally sent. We sent all of it again along with copies of other things that they did not request, all proof that she does actually reside there. After 3 letters from IRS stating that they were working on it and the decision would be made soon, she called yesterday excited because she received her $8000 plus $162 interest. But that was a simple one. The difficult ones are the constructed homes. IRS keeps wanting a certificate of occupancy, and our area also does not issue these. One client did get our property tax assessor and building inspector to write letters stating the facts. But that is not common practice. They do not want to spend a lot of time writing verification letters.

[BP.]

Anyway, just venting.

Besides venting, you gave us lots of useful info here, so thanks!

[Jiggers]

Irony, isn't it

e-File a return with a bunch of kids, EIC, child tax credit, low income, and a refund of about $8,000 and the IRS issues the refund in about 10 days!

No verification, and this area has a higher incidence of fraud.

Then the IRS realizes the mistake months later and then penalizes the preparer! Didn't even try to get the refund back from the taxpayer.

I am waiting for a refund on a 1040X for 2009, that was occupied this March. Absolutely first time homeowner.

[DaveO]

I just put an inquiry into eservices yesterday. True FTHB filed on 2009 return in mid-Feb. Where's my Refund doesn't even show the return was received.

[JohnH]

I agree - this is a very helpful discussion. After saying I was not going to be involved with this credit, I relented but only because they are long-term clients and I know the history on each one.

I just submitted one that past week and have two more in the works to go out in a week or so. I'm just telling everyone "don't hold your breath - it's probably going to take a while".

[joanmcq]

the IRS is awash in paper filed returns and amended returns. Its hard to get the phone answered because people are getting pulled out of audit units to process amended returns. 6 month wait time, minimum. I talk to the IRS all the time and they give me the horror stories from their end. Congress passes these things like the frikkin stimulus payments and FTHB and leaves it to the IRS to take the brunt of it. Not that I love the IRS, but imagine your workload quadrupled because of new stuff our legislators think up....

[abctax]

....but imagine your workload quadrupled because of new stuff our legislators think up....

Are you possibly referring to the new 1099 reporting requirements !?!?!?! <W>

At least we get to up our fees to compensate.

[taxea]

Black Bart What dept are you referring to as the "problems" division?

[S T]

Paper Filed

I discovered today, that a very simple paper filed return mailed on or about 2/1/10 as a direct deposit of refund (efile has not accepted for the last few years not matching master record and we have not been successful in correcting) with $ 800 + refund,(NO EIC or FTHB) is stil not posted. Had client call today and IRS advises return can not be located and

IRS admitted you "paper filed" we are awash in "efiled" returns. The wait time for paper filed processing has now escalated from 6-8 weeks to 12- 16 weeks for simple processing.

This is not an amended return, simply an original filed "paper return".

Don't know what to think?

Sandy

[Black Bart]

Well,

Well, it gives me a little more insight to my "M" errors. I posted earlier about resolution time but no responses yet. Wondered how others are faring. Would be interested in how to go about "hashing out the differences." Phone or letter, and forget about 1040X?

M is a pretty new 1040Xing thing, so I don't know for sure, but I'll say this. A few times I've had such small errors and didn't want to amend while others said "it's regulations/professional/etc." But IRS phone reps have some discretion and sometimes (not always) I've called and a cooperative agent has said "Hang on, I can fix this over the phone." And did.

Seems to me like "M" problems might need some backup paperwork sent in, but unless you're looking for some summer work you could give the phone a shot first. Probably a long shot with volume as it is now (I was on hold for 20 minutes for the above guy), but nothing to lose.

[Black Bart]

Your guy's stuff is ONLY 2 months old? Mine...was first filed in November...

For this client I was only complaining about the necessary document duplication -- my other two unprocessed cases were filed in November and January.

...did get our property tax assessor and building inspector to write letters stating the facts...

Good idea -- I may give the inspector a shot but our assessor's too busy jacking up taxes (he moves ON a doghouse before the dog moves INto the doghouse).

Besides venting, you gave us lots of useful info here, so thanks!

Thanx for the thanks.

Black Bart What dept are you referring to as the "problems" division?

I don't actually know that it is a problems "division" or what their official department title is. I'm calling it that because my client's letter listed a questions/problems number.

When I called that number, the computer gave me the number and extension I posted. It's not Practitioner Priority, but I recognize it as the same number that I've called several times in the past and it's usually staffed with above-average people (although not so "above" as they used to be).

[JohnH]

I almost always call the phone number on the notice as a first response. When I get someone on the line I ask them for permission to put them on hold while I conference the client in on the call. I'd say that 75% of the notices I've seen over the years can be handled in this very simple fashion. No time wasted with POA's and other delays, then move on to more productive work.

Obviously there are situations where you don't want the client anywhere near the conversation with IRS, but they're rare. That's why we're supposed to have professional judgement and apply some common sense. But then maybe I just have a very basic client base.

[RitaB]

Mine, too

Good idea -- I may give the inspector a shot but our assessor's too busy jacking up taxes

Mine, too. And not just the tax rate went up. Everybody's assessed values increased. Imagine that, the entire world of real estate took a nose dive, but not in my town.