CP 2000 Alert

[Kram BergGold]

I just got a CP2000 which was totally wrong. Client had two 1099-R forms coded G for 2010. We reported them but of course they were not taxable. CP2000 asked client to pay tax on them plus her SS which went from non taxable to taxable due to the extra income. Either this was a one time fluke (I doubt it ) or you to will be seeing these.

[jeff501]

I had a client bring in the same thing this week. CP2000 showed they owed tax, penalties and interest on unreported income from a 1099R, which was a rollover. The return we did in 2011 showed where this information was included. Just hope this isn't the start of many more of these notices being generated for 2010.

[AJsTax]

two this week

We received two this week. The information on the cp2000 even shows a code G. but made them taxable. We sent a copy of the 1009-R and a letter saying, "sorry, no pay."
We wondered the same thing, why send a notice when the code is quite clearly a G?

[Nashville]

CP12 as well

Had a CP-12 that was totally wrong as well. I'm not that familiar with a CP12, but I think it is used when altering a refund.

This one told the taxpayer he should be using the Capital Gains tax calculation for qualified dividends. However, the calculation on the CP12 changed the tax from our CG tax calculation to the tax tables.

Go figure.

[Dusty2004]

Tax Software

I just got a CP2000 which was totally wrong. Client had two 1099-R forms coded G for 2010. We reported them but of course they were not taxable. CP2000 asked client to pay tax on them plus her SS which went from non taxable to taxable due to the extra income. Either this was a one time fluke (I doubt it ) or you to will be seeing these.

Just wondered what tax software everyone used to see if there is a link there - maybe e-filed something wrong.

Dusty

[FEDUKE404]

More info needed

Just wondered what tax software everyone used to see if there is a link there - maybe e-filed something wrong.

Dusty

I had basically the same question about efiling of these returns, AND whether the appropriate distribution code was actually entered into the software that prepared the efiled or paper return.

A paper return should have plainly shown the words "rollover" and an efiled return should have processed with the same information included in the electronic data.

If the IRS is that inept, there could be many problems out there for all of us.

FE

[Nashville]

IRS - inside story

Not long ago at a seminar they invited an IRS spokesman who told us the "enforcement" personnel had been increased 17% and the "service" personnel had been CUT 10%.

And much of the reporting/collecting data has to be re-engineered to accommodate the Healthcare Legislation, MOST of which is forthcoming as early as January. I would think the detail-oriented people working for the IRS are having a miserable time right now.

If anyone has an inside scoop on what is going on behind the scenes with them, I wish they would post.

[Gary2]

I would think the detail-oriented people working for the IRS are having a miserable time right now.

I believe the software people are having a miserable time of it.

[veritas]

Got my

first letter today. Same issue.

I'm thinking it's going to be a busy post season

[erchess]

I don't want to go overboard with severity

but there should be some kind of financial penalty for the government when they demand money that they have all the information needed to know they are not owed. Paying the practitioner's fees plus any necessary collection costs would not be too severe in my opinion. After all, we and our clients are subject to penalties for frivolous filings, why should not the government be?

[JoshinNC]

Job Security

first letter today. Same issue.

I'm thinking it's going to be a busy post season

Now, the question is, do you bill your client 1/2 hour time to write a response? It's not my error, so it should be billable. Haven't gotten one yet, but I'm sure they're coming.

My $.02, if I wanna get rid of the client, I'll bill them, if I don't, I won't. But, if I get too many of these I'll bill everybody and use the same schpiel as I did with Scheule M, Form 8949, etc. "the IRS has created additional work for tax pros which we must bill for, at least it's deductible".

[RitaB]

Well...

If the IRS is that inept, there could be many problems out there for all of us.
FE

Widow brought in letter dated 4/30 on 4/24. They did not give her credit for 2011 estimated tax payments. She wrote her SSN on the memo lines of the checks. Granted, he died 2/2011 so it's a joint return, but c'mon. If they can do time travel, surely they know about memo lines and spouse SSN.

[Nashville]

Popular Opinion

but there should be some kind of financial penalty for the government when they demand money that they have all the information needed to know they are not owed. Paying the practitioner's fees plus any necessary collection costs would not be too severe in my opinion. After all, we and our clients are subject to penalties for frivolous filings, why should not the government be?

Erchess, most people in this country would agree with you, and even more would like to see some level of accountability placed on government. But the ages-old argument made by the government is that if they had to pay for their mistakes, the taxpayers themselves would have to pay for the cost of doing so. However, this argument is losing validity because #1 their spending is just added to the deficit and taxpayers are NOT paying and #2 this argument has become a crutch to take the pressure off their obvious fumbling and bumbling.

However, would you SUPPORT the following???
1) Government has to pay the same penalties for the same mistakes to the people who are affected, to the same extent they charge penalties AND
2) To finance the above, 1% would be added to everyone's tax rate.

Now if we are REALLY SERIOUS about IRS accountability, would we support this choice? I would.

[Nashville]

Yes I do bill

Now, the question is, do you bill your client 1/2 hour time to write a response? It's not my error, so it should be billable. Haven't gotten one yet, but I'm sure they're coming.

My $.02, if I wanna get rid of the client, I'll bill them, if I don't, I won't. But, if I get too many of these I'll bill everybody and use the same schpiel as I did with Scheule M, Form 8949, etc. "the IRS has created additional work for tax pros which we must bill for, at least it's deductible".

I do bill them Josh. I don't charge a fortune, but I can't compose a letter and get it outa my office in less than an hour no matter what. Sometimes the letter requires supporting data and calculations as well. I charge about $30 for a typical letter, so I'm not getting rich. If the client is being billed less than $25 I give them the option of paying so the IRS will shut up and leave them alone.

If the mistake is mine to begin with, the letter is (of course) free. But this is happening less and less, and seems like almost all the CP2000 stuff is either IRS screwups or else the client not reporting something.

[RitaB]

Not me

To finance the above, 1% would be added to everyone's tax rate. Now if we are REALLY SERIOUS about IRS accountability, would we support this choice? I would.

As long as waste like with the GSA scandal is going on, nobody's taxes should be increased. Not Warren, not Warren's secretary, not me, not you, Snags.

Hellur?

OK, maybe cut some refundable credits to pay for it. I might go for that.

And, how can I get Warren's secretary's job?