For professionals only, please?

Question

During the past week I have dealt with two cases of the IRS (aka Treasury Dept I assume) withholding refunds...(Sorry it is gonna take awhile to explain).
 It took me three days of going to the local office where they only had one person working...to talk to someone in person.
 The first case was an amended return where the TP's were due back additional money, they filed MFS and then changed to MFJ and they were holding it because the wife would owe money but the joint return would cover that amount and still have a refund due. I talked to the IRS twice on the phone they agreed...and said the refund would be sent, so they had enough money to pay the amount the wife owed. Just a simple swap of checks. But that never happened...and this was in Feb..and June. Now they want to garnish her wages.
 The next case was a client where they claimed they never recieved the Sch. EIC....so they disallowed all credits and applied another years refund to the SE tax, because she filed 3 years in one year.
 Our system doesn't allow you not to that schedule...and the letter said she didn't owe anything for that year...she almost let it go. But she is due over $5000 now. When I asked the local office they said it shows that the Sch EIC was received. So I asked why this happened...they disallowed all of the credits...including making work pay credit, instead of requesting the Sch EIC....and took $1555 for a refund from a different year. She had no answer.
 So I asked her why I was on the phone and explaining it the person only lowered the tax liabilty from $1555 to $55 and didn't issue a refund on that amount before I filed an amended return to tell they screwed up. Again no answer...again this was months ago...and they never requested an amended return for a form that their system shows was processed.
 
So my question is are any other professionals having these same problems?

Max Hoopla · Accepted Answer

The more I read this the more confused I get.  You need to lay out the problem one step at a time.

Anonymous · Answer

Issue #1.  When 2 MFS returns are merged to 1 MFJ one, the secondary spouse's account is supposed to be zeroed out with any refund/debt being copied over to the primary account.  Sometimes the clerks at the service center don't zero out the spouse account.  Since they would still owe, the refund on the primary account won't be released.

I would get POAs and use eservices to get both transcripts (actually 4, both tax returns and both accounts) and verify all numbers again.  Then call the practioner hotline.  You probably will have to submit it by mail or ask for a referral to the service center as online assistors aren't really trained to clean these up.

Issue #2.  By any chance was there an EIC disallowance in place?  The form 8862 could be missing.

Something else is going on if the Making Work Pay credit was disallowed.  What kind of income was this?  Cash-based babysitting?  Is it possible the IRS reclassified the income as "other"?  It's not uncommon for the MWP credit to be reduced if the person also gets SSA or VA benefits of some kind.

tro · Answer

to respond, your experience and one I had last year leads me to believe the 'friendlier, happier IRS" that was announced some years ago has disappeared and when I think of the thousands of taxpayers who will blindly try to file their own returns in the future, I wonder how this is going to make the IRS more efficient
I made this remark to another member of the tax society I belong to and he just said IRS will merely incur a penalty and not try to resolve anything

Trending News

For professionals only, please?

3 Answers