Adoption Credit

[Mo Sheets]

Just received correspondence from the IRS that they are holding up the refund for one of my clients. Their return had to be hard-copy filed this year due to the adoption credit. Has anyone else received correspondence from the IRS on a return filed claiming the adoption credit? The letter (CP05) states they are holding the refund until they complete a more thorough review.

I was just curious if they are doing this on all of the adoption credit returns or if this is just a fluke......Thanks for your help!

Mo

[outwest]

Same story here..

We've sent the docs (court orders, special needs determinations, etc etc) with the return and to the audit center and just got a request for the same information a third time.

One more time and the taxpayer advocates office will get a call.

Doug

[Mo Sheets]

Thanks for the reply

We sent all of the required documentation when we submitted the return. I wanted to see if anyone else was having the same problem.....thanks again for taking the time to respond.

Mo

[ChEAr$]

No such problem has surfaced here; yet; with IRS. However client did get requests for substantiation from state of Alabama.

and those guys are picky picky, so I think that with no meal receipts those will be disallowed.

[jimmcg]

We sent all of the required documentation when we submitted the return. I wanted to see if anyone else was having the same problem.....thanks again for taking the time to respond.

Mo

Under the Services' new audit selection software some returns with adoption credit (and a few other items) are being randomly selected for mail audit. Had one a few months ago. No problem just takes longer. Helps if you can get one person at the audit level to handle it rather than do the IRS "two step." Think of it as revenue enhancement on your part.

[Mo Sheets]

A Sign Of The Times

This is the only client I have with the adoption credit. I told my client we would have to hard-copy file this year but the good news was they could use the remainder of the credit this year....and now this! I don't anticipate any problems, but wanted to find out if anyone else who had an adoption credit return had received a similar letter.

I live in a rural area and don't charge extra for any additional work outside of tax season UNLESS I receive a notice that the taxpayer failed to report income (which has only happened once)....same thing with an audit....I tell them I'll go with them in the event of an audit to explain the return but it will cost them if they suddenly "remember" something they failed to disclose to me (and subsequently to the IRS)....I am very lucky in that my client base is made up of people who want to do the right thing.

Mo

[MAJ]

2007 / 2008??

Last Adoption credit I did was few years back. Great story!! Want to hear it?

No problems at all..

[oceanlovin'ea]

I had one client with an adoption credit this year. He actually adopted 2 this year and had a carryforward for several others.

We mailed the return in along with the documentation on the current year's adoptions. The IRS refunded him all of his money except the adoption credit. They asked for all the documentation. We could not tell if they wanted it for the current adoption year or for all the adoptions. We faxed them everything. I numbered the pages and told them if any page number was missing to contact me.

I sent him an email and he said that they call every week and they tell them that it has been assigned to an examiner and it shouldn't be much longer. He said after June 1st they have to start paying interest on the money so hopefully they will get it soon. I think I will call and see what I can find out next week.

So we can see there is a definite delay even when you do EXACTLY what they tell you to do.

Linda, EA

[outwest]

An Update..

The client with three adoption credit carryovers has now passed review and cleared. Basically a no-change audit and rest of the refund should be sent in 4-6 weeks.

Return mailed in around 2/28...

[oceanlovin'ea]

My client said last letter he got said he would hear from them by 7/08/11. That is a ridiculously long time considering we faxed all the paperwork they asked for on March 15th. I tried to call the number this morning and the examiner wouldn't talk to me because the POA was not on file. I told him I could fax it to him but he said it wouldn't be in the CAF system and he couldn't use it. I told him I have done this many times but he seemed to be stumped so I hung up. I will try again this afternoon and see if I get someone different. I also went ahead and faxed it to CAF.

Linda, EA

[outwest]

That is one thing that I like about the E-services system

I've found if I register the POA online, I can call right away and the agents will find it in the CAF system. Big help on this stuff.

[oceanlovin'ea]

Don't you have to have a PIN to do it online? How do you do that? I tried to figure it out and was stumped.

Linda, EA

[sea-tax]

I currently have one of these under review my first and only adoption credit. Funny thing is that we took the credit in 2009 no problem but this came about when we tried to collect the remaining carryover in 2010. We had to paper file 2010 and attach documentation to the return like the instructions asked. In April we get letter saying they need the same info we attached to the return. So we sent it in again in May and have yet to hear back.
Other day I was reading an article on line I think it was CNN said that the IRS had gotten 72,656 returns claiming the adoption credit for 2010 and has selected 58% of those for further review. The total amount of credits claimed by these 72,656 returns were $897 million. Looks like resolution will take some time. From the article it sounded like this is affecting many families. I let my client know we may be in this for the long haul.
Lucky for him he already got most of his refund in 2009, the 2010 amount is less than 20% of the total.

[S T]

Verification

Linda,
There are a couple levels of verification on e-services to file in a POA
I am going from memory, so might have left out a step or so.
First of all you have to be signed on with E-services with a user name and password and PIN#
Then after you enter all of the information relating to the t/p such as eservices for POA, there is a verification process
First is "your" (preparer) verification , there is a box to recall most of your information that has been recorded on the CAF system, but will reqiore the PIN# you set when you signed up for E-Services
Second verification is for the taxpayer and/or spouse - which is AGI from a prior year return and that year noted, t/p and/or spouse PIN# (I use what I used to efile their return with, and t/p and/or spouse DOB
Once those are entered they are verified to IRS records.
Most of the time I don't have an issue, but there has been an occasion that my records did not reflect the correct DOB.

Hope this assists you,

Sandy

[Mo Sheets]

More information...

I called the IRS this week about the documentation. I told the person who I spoke with that we had sent in the adoption documentation with the mailed in return and asked if we needed to repeat this step. I was told "Yes, because the person conducting the audit may not have access to the return itself." While the gentleman I spoke to was very nice, I have to question whether the IRS is farming out this work to someone else....why wouldn't the examiner have access to all of the hard-copy information filed originally?

Go figure.....let me kill a few more trees!

Mo