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Solution to IRS bottlenecks


Edsel

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If you haven't already judged me from previous posts, this one may convince you that I am a very stubborn cynic.  I wish I weren't, but sometimes you have to force ugly issues.

There are people in the IRS who are simply not doing their job.  Yes, I know congress cut their budget in 2013, and they claim they don't have resources to timely complete their work, but that also provides them with an excuse.  We as preparers cannot force the agents in the audit division to do their job, nor can the telephone staff.  The Taxpayer Advocate is slower than ever, but is not even available except in "hardship" cases.  I have had customers contact their congressman, but they receive a nice letter thanking them for their inquiry and with assurance that "all treatment will be assured to be fair" and nothing else happens. 

I have noticed that they seem to be much faster if they are making determinations where taxpayers owe money.  I don't think it is a coincidence because we all know that agents are rewarded with raises and promotions for collecting more money.  But I have 2-3 people who have refunds held up for close to a year.

My solution?  Report the strangled refund in the following year as "estimated taxes paid."  If the IRS pays, then VOILA!! the problem is solved, and the IRS is the party holding the empty bag, and you had better believe they will suddenly find time to clean up the mess.  If the IRS catches it before processing a payment, then they have further necessary attention drawn to the situation and will clean up the mess.

I am asking for opinions, and I am expecting some of you to express absolute horror at this bold strategy.  I expect to be warned by some of you that I would be subject to penalties and borderline fraud.  That's OK, I still want to hear your opinion.  Especially, if you have an alternate strategy to get them to work on a more timely basis, I want to hear from you as well.  But I can't think of anything that hasn't been tried.  Be advised that I am not trying to cheat the government.  I simply don't think the govt should be the beneficiary of a tawdry action by congress, as the reduction would certainly not have happened if their revenue was in jeopardy.

Thank you for reading this far...

 

 

 

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As a matter of fairness, I think offsetting the unpaid refund against current year taxes is reasonable. (similar to the bank invoking their right of offset when someone fails to pay on a loan but also has funds on deposit in other accounts).   But as a matter of practice, it wouldn't be wise.  It will do nothing but add confusion to an already convoluted process and create an additional paperwork blizzard.  I'm guessing it would require at least a half-dozen separate letters and maybe a couple of hours explaining things to a very confused client.   I doubt most clients would be happy when they receive the bill for the extra work you'd have to do in straightening it out.

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 As a practical matter, the IRS does have 11,000 fewer employees and our congress keeps imposing additional mandates without any additional funding.

Then everyone scapegoats the IRS for every little thing. It would be very difficult to be an IRS employee under these conditions

Actually some knowledgeable observers are very concerned that the IRS may have an institutional collapse.

I am afraid that this situation will get worse.

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Already some very good comments, and more are welcome.  cbslee, I would agree with the plight of the IRS, except that when congress cut the IRS staff, it only applied to the audit division.  Actually a few MORE people were added to the collection division at the same time.  The obvious intent was to cut the IRS but not revenue, and they knew it would work.  I can't believe that in the finality of the decision, the IRS commissioner at the time was complicit after presenting the effect of it to congress.

I also believe some IRS employees are using this as an excuse - and from my limited observation are pushing aside work that involves taxpayer refunds in favor of work that raises money.  As stated before, all of us know the raises and promotions go to the IRS employees with a track record of collecting revenue.

The institutional collapse may be eminent, and if that is what restores the IRS to functionality, I would welcome it.  But as long as revenue is not impacted, I can't imagine congress would care. 

Already there are a few employers around here (not many) that are ignoring garnishment and levies from the collection division, instead trusting whatever tale their employees are telling them.  If this were to happen on a massive level, something would be done.

Edited by jklcpa
strike out political
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13 hours ago, Edsel said:

 

My solution? 

I am asking for opinions ...  at this bold strategy.

 

Everyone, please stick to the above topic as that was the guise under which this topic was posted. 

Any further comments on the intent or reactions of Congress, complicity of then-IRS commissioner, IRS collapse, or anything else having a political bent to it, then this thread will be deleted.

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If there are other moderators, I invite them to read my post and agree or disagree whether it was politically motivated.  There was certainly no "guise" to hide political comments.  The IRS and congressional oversight are a part of what we have to deal with and statements I made about IRS and congress are statements of fact, and I would challenge anyone to impart any partisan politics from them.

Being politically neutral myself, I have tried to respect the policy of invoking politics into discussion.  Judy, I can appreciate the desire to keep the board from fomenting politics, but I believe you have over-reacted.  I seem to be the target for removing language thought to be political, and was clearly guilty once.  If this is what I'm dealing with, I don't need to be here.

 

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Max, I believe everything (except my suggestion) has been tried.  We can start with the usual POA and Practitioner Priority Service.  Add the prescribed waiting periods (such as 16 weeks for amended returns), and then promises from telephone personnel that the matter would be closed by xx/xx/xxxx and then when it doesn't happen, yet another promise that it would be rectified by xx/xx/xxxx.  Invitations to invoke the TAS are met with "We only take hardship cases", and appeals to congressmen result in nice letters but no action.  I even had a telephone worker tell me "this person is clearly NOT doing his job, but there is nothing I can do about it."  If you can think of anything else that has a chance of removing the roadblocks, I would appreciate hearing it.  My suggestion to claim unresolved amounts as estimated tax prepayments is certainly the very last thing on my list.

I myself don't like the idea, but I am not going to sit idly by and let my clients do without while nothing shows any promise of happening.

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If you cant beat them, join them.  How about having a disclaimer for your clients like most audit representation engagement letter have:


NO PREDICTION OF RESULTS 
ALTHOUGH WE WILL USE OUR BEST EFFORTS AS CERTIFIED PUBLIC ACCOUNTANTS FOR THE CLIENT TO REPRESENT THE CLIENT IN ACHIEVING THE MOST FAVORABLE POSSIBLE RESULT UNDER THE LAWS OF THE UNITED STATES, WE MAKE NO REPRESENTATION OR PREDICTION THAT ANY GIVEN RESULT WILL OCCUR AS A RESULT OF SUCH EFFORTS. 

One can add, I am not responsible for the time it takes to resolve/close the case due how the IRS/Taxpayer Adovcate works.....

Client signs the engagement letter and the wait game begins.

 


 

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11 hours ago, Edsel said:

I myself don't like the idea, but I am not going to sit idly by and let my clients do without while nothing shows any promise of happening.

You (or someone) could try to get the alternative media to do an expose.  Breitbart, Project Veritas, newsy bloggers, that ilk.  What used to be known as the press (see, Judy, I am avoiding giving the name I actually use for those ... well, I'll stop here, too) will likely have little to no interest as their agenda is elsewhere - but the smaller outfits might, as it would be the type of exposure that would do them quite a bit of good.

 

P.S. - my notes to Judy are intended to be funny!  Hard to tell intent in print; there's no emoji for tongue in cheek.

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Edsel:

Sure, why not try that strategy?  Posting it as a refund carried forward to the next year, maybe, just maybe, something gets resolved.  Not much else works.

And  yes, the IRS and other taxing authorities are clearly processing paperwork for balance dues instead of for refunds.  And if those refunds are applied to later years, the problems start to snowball.  I have started to NOT apply refunds forward for many clients that make estimated payments, because of IRS's and others ability to process a refund correctly, because once there is a problem, it takes 2 years to fix and blows up other years.

Rich

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If the client is waiting for their refund and you have no reason for the delay and the next tax return is due - I think you are 100% in the right to declare it an estimated tax payment as long as the client realizes that they should quickly make a payment in case the payment comes into them.

My current problem is I am waiting on a refund for a deceased client. It's literally the only thing left to be distributed.

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The issues that cause the delay are NOT MY DOING!  I have a huge disclaimer that is part of my engagement letter stating that the amount of time to receive refunds is TOTALLY up to the IRS and I cannot change that.

14 hours ago, Edsel said:

I myself don't like the idea, but I am not going to sit idly by and let my clients do without while nothing shows any promise of happening.

Edsel, be wise and choose your battles.

You will LOSE on this one on several fronts.  Your actions WILL NOT change the processes of the IRS and will only cause your client (and yourself) more trouble and heartaches.  There is more of a chance that, your proposed course of action will cause delays in subsequent year refunds as well.

I choose not to portray myself as the SuperHero taking on the entire infrastructure of the IRS due to something that I did not cause.

And, you put yourself right in the crosshairs for accuracy penalties on yourself.

How much of a gambler are you with your clients' money and your ability to prepare taxes.

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On 11/23/2017 at 8:42 PM, Edsel said:

Max, I believe everything (except my suggestion) has been tried.  We can start with the usual POA and Practitioner Priority Service.  Add the prescribed waiting periods (such as 16 weeks for amended returns), and then promises from telephone personnel that the matter would be closed by xx/xx/xxxx and then when it doesn't happen, yet another promise that it would be rectified by xx/xx/xxxx.  Invitations to invoke the TAS are met with "We only take hardship cases", and appeals to congressmen result in nice letters but no action.  I even had a telephone worker tell me "this person is clearly NOT doing his job, but there is nothing I can do about it."  If you can think of anything else that has a chance of removing the roadblocks, I would appreciate hearing it.  My suggestion to claim unresolved amounts as estimated tax prepayments is certainly the very last thing on my list.

I myself don't like the idea, but I am not going to sit idly by and let my clients do without while nothing shows any promise of happening.

Well, at least one thing hasn't been tried - form 3911.  https://www.irs.gov/pub/irs-pdf/f3911.pdf

This will put a trace on the refund.   I have had, on more than one occasion, returns that were assigned to someone who either was moved to another location, resigned, or died.   In every instance, the returns were lost including 12  of one client's 941's.

I'm assuming that you got the transcripts confirming the refund. At least you can show these to the client so they don't think you are doing nothing.

One thing I would have done after the second stall, is to ask to speak to their supervisor.   The supe of the guy who said he couldn't do anything might have been able to do something as they have access to more info, and have much more experience than the phone people.

 

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I agree with Max' post above and about possibly escalating this to a supervisor once the case is confirmed as finished and that the client is due the refund.

I also agree with Jack that trying to claim the refund on the next year's return would expose the preparer to accuracy-related penalties.  Doing so would be a clear and intentional violation of Circ. 230.  Additionally, doing so would go against the basic underlying premise, and one that auditors rely on, that each tax year stands on its own and that a error or omission in one year can NOT be corrected in the subsequent year. It would serve to foul up that following year also, and that is not in the client's best interest.  Of course, this assumes that the preparer did not, in fact, request a credit carryover of the refund to be applied as part of the estimated taxes of that subsequent year.

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Thanks to everyone who has responded.  There are mixed reviews, and some of the responses I predicted from the start.

I would like to clear up a few items at this point to explain more of a couple situations still ongoing.  (I've had this same problem 4-5 times since the IRS had their budget cut).

Max' suggestion of a 3911 is quite appropriate, except for the fact that the matter is not yet out of the audit division.  The 3911 would work if the refund had been approved.  So long as the situation remains unresolved, the 3911 would not tell us anything.

One of the problems was my fault which I had to correct with an amended return.  Otherwise all the suggestions that I not prostrate myself on behalf of my clients for some situation I did not create is null.

The opportunity to talk to a supervisor is not available.  I can't even speak with the party charged with the responsibility of getting it done.  The telephone staff is there to make sure you can't really talk with anyone with real responsibility.

Judy's reply is the most "textbook" and probably the most wise for most people.  John H and others believe claiming such matters as estimated taxes only befuddles the situation and makes it worse.  I believe it would shed so much light on the logjam that something would be done, especially if the IRS were left holding the bag..  I believe the IRS would also be in a position to penalize me for a "clear and intentional violation of Circ. 230" if they were willing to dismiss their own embarrassment for sitting on  a situation until it became rancid.

I sincerely appreciate this discussion.  "Edsel"

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2 minutes ago, Edsel said:

 I believe it would shed so much light on the logjam that something would be done, especially if the IRS were left holding the bag..  I believe the IRS would also be in a position to penalize me for a "clear and intentional violation of Circ. 230" if they were willing to dismiss their own embarrassment for sitting on  a situation until it became rancid.

You keep believing that.  If that is truly what you believe, I have a bridge to sell you.

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21 hours ago, Edsel said:

I believe it would shed so much light on the logjam that something would be done, especially if the IRS were left holding the bag..

Share your frustrations with the IRS liaison for your area.  While they do not handle individual cases, they are interested in systemic problems and will bring them to the right people's attention.  If you have several clients with refunds who are getting no attention vs. the ones who owe, tell your liaison about the missed deadlines, inaction, etc. One year all of my clients who had a deceased person on their returns got rejected because the SS# was locked by SSA.  My liaison got it fixed in no time.

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Sara thank you for your suggestion.  The liaison in Nashville is Susan Gainous, and she is terrific.  And I have communicated with her, and she will not get involved in individual cases, but has expressed interest in addressing systemic problems.  If I could make a case for someone not doing their job becoming evidence for a systemic problem I would certainly do so.

Jack from somewhere in Ohio compared my situation to a hopeless crusade of cleaning up all the defalcations of IRS employees.  His was good advice, but I will reveal that my subject course of action did work on two different occasions with the Alabama Dept of Revenue.

All of you have made good comments and have been helpful.  My conclusion is that claiming unresolved issues as a prepayment toward successor year estimated taxes is really an intentional item of misreporting and a rather blatant violation of Cir 230.

 

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15 hours ago, Edsel said:

claiming unresolved issues as a prepayment

Y'know, just *thinking* about doing it is probably close to 85%* of the satisfaction of actually doing it, with zero Circular 230 repercussions.  Plus, we all got a very interesting forum topic out of it.  That help at all, or are you ready to glare at me for my cheek?  :P

(*Of course, 93% of all statistics are made up at the time of use.)

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