Change in Return but no Tax Change - Have to Amend?

[Unregistered]

I have a client that received a distributions from a Health Savings Account but never prepared Form 8889. There is no tax consequence as a result of the omission. Do we need to file Form 1040X?

[JG EA]

No, you don't have to amend. In asking this same question on the board, I believe the consensus was if no change, no need to amend. However, if no tax change, but the result would affect later years (a carryover or the like) then amend.

In your case no change for now or the future seems to be involved.

[Black Bart]

Agree with JG.

No, you don't have to amend. In asking this same question on the board, I believe the consensus was if no change, no need to amend. However, if no tax change, but the result would affect later years (a carryover or the like) then amend.

FYI; although I've never had a case in which that particular form was omitted; I've found that if you get an IRS letter (sounds like unregistered did not) such as a CP12, CP2000, etc., you can just call IRS and, depending on the mood and/or attitude of the rep, you may be able to get your problem fixed right over the phone without having to go through the 1040X hassle.

Even if it may not be strictly according to Hoyle, sometimes they can and will fix it for you anyway. The notice usually has a phone number on it and if the first rep can't/won't help, then you can wait a few minutes, redial, and you'll get somebody else (Ogden, NY, CA, FLorida, Austin, wherever--calls are routed around for traffic volume) who just might handle it. Doesn't hurt to try, especially if it's your error (no fee) instead of the client's.

[Unregistered]

Although there is no tax consequence, there is a 1099 floating around out there and was just hoping to avoid a notice.

[oceanlovin'ea]

Black Bart

You answered a question I have had in your answer above. I called a couple of days ago about an amended return. My client hadn't received the additional refund yet and I called to make sure that everything was in the process. This agent wouldn't even tell me if they received the amended return because the 3rd party designee doesn't cover amended return. I told her I didn't need any other information but had they received it and she wouldn't tell me anything (although I am quite sure she was looking at the 1040X)

So my client has to come across town to sign a 2848 so I can call again. Maybe I will just go ahead and try this morning and see what happens.

A month ago I had a similar situation and the person I talked to told me that the original return hadn't been entered in the system yet. Even though I electronically filed it in February, it was still not in the system so that it could be viewed by the people answering the phones. He told me it should be viewable in about another week and then the 1040X would be processed.

So I think you are right that some will give you an answer and so won't.

Thanks for the insight.

Linda F

[Jesse]

Get it over now

Even though there is no tax difference I would amend before you do get a notice, which most likely you will. The IRS does not know that this money is not taxable so you need to let them know by way of the form 8889.

I would just do the form 1040X and attach a copy of the Form 8889 at this time rather than wait for a notice that might come say during the 2007 tax season when you don't need to take the time to deal with the extra hassle.

[oceanlovin'ea]

I worked Black Bart

I just called IRS again and got a very nice lady who told me the amended return was there but had not been processed yet. Give it another 4 weeks.

Thanks for the tip.

Linda F

[Black Bart]

You're welcome and

your experiences reminded me of something funny that happened to me some time ago involving an IRS rep. I called about something on a client's return and it went so:

IRS: Did you check the 3rd party designee box on the return?
BB: Yes I did.
IRS: Fine. Now, do you have a power of attorney?
BB: No.
IRS: Is the client there?
BB: No.
IRS: Then I'm sorry, sir, but I will be unable to give you any information with regard to that tax return.
BB: I thought we just cleared that up. I checked the box--look at the return if you don't believe me.
IRS: I'm sure you're being truthful sir, but I am not allowed to view the return and verify that the box is, indeed, checked without first securing the client's permission or a valid power-of-attorney.
BB: (stunned) Umm..okay...well, lets see..now..you're...saying...that, in order for you to be able to look at the the box which does away with the need for getting a POA, I have to get a POA! Is that right?
IRS: That's correct, sir.
BB: Hmm..well now..uhh..this seems, to put it mildly, a bit strange to me. Doesn't that..uhhh..sort of..uh..defeat the whole purpose of the 3rd party box?
IRS: I'm sorry, sir. I don't make the rules; I just follow them.

Thinking about it after I hung up, I thought maybe she was just a nut, but I later read in a trade publication that, sure enough, it was for real and that IRS had since corrected it. I swear, nobody, and I mean nobody except IRS could have come up with that one.

[Unregistered]

IRS Rep

I found sometimes it is just a waste of time to call the IRS. We are thinking always attach a POA to the tax return even though the box is checked.

[Black Bart]

That seems like

I found sometimes it is just a waste of time to call the IRS. We are thinking always attach a POA to the tax return even though the box is checked.

kind of an overreaction to me.

Yes, sometimes it is a waste of time to call them, but at least 50% of the time it isn't. It's toll-free and I usually have the time after tax season.

I haven't called to see if the checkbox problem is truly resolved, but even if not, I certainly wouldn't want to go the trouble of getting several hundred POAs to counter the likelihood that five or six might eventually be needed.

P.S. People are a little leery about signing a power-of-attorney, even one that's just about taxes, because it seems to give you too much authority. They don't like doing it, and even less before they actually have a problem.

[S T]

I would amend

I agree with Jesse post, while it doesn't seem like you would have to amend, a form was omitted from the tax return, regardless of whether there is tax due or refund. IRS notices are usually sent out because of a form missing or incorrect info, take for example the stock options exercised through the employer. We all know there is no tax due, but since there is a 1099B issued a schedule D needs to be attached to the tax return.

Same would apply with the form 8889, there is reporting somewhere to IRS and they are looking for the form 8889 to see if it is taxable.

Simply state in 1040X explanation for change, form 8889 omitted from original filing, see attached form 8889, no tax change.

Sandy