Who is to be blamed? Me only or the IRS E-file system too?

[Lucho]

I don’t know how the SS #s mixed up in the tax return of one of my couple clients. The spouse SS number ended listed as the taxpayer’s, and the taxpayer SS number went to the spouse. The transmission was accepted.

How could that happen if the names and SS#s did not match?

I feel lucky that the taxpayer went to the SS Administration to apply for his benefit (he is over 65) and the employee taking his case found out the mistake (his self-employment tax for 2012 is being credited to his wife). I will amend this return this weekend.

Has anybody run into a situation like this?

Do I have an argument in my favor that can give a little relief from this mistake?

Thank you in advance

Lucho

[Guest Taxed]

You may want to request transcripts and see how far back this went? If you have copies of prior year submissions that were correct then I would say you have a good chance of getting that fixed by IRS and SSA.

Did not have quite the same issue but over the years I have had a few taxpayers who did NOT get credit for SE when they went to apply for benefits. That was more of a pain to fix because they had to provide all sorts of documentation. Unfortunately these people don't pay any attention to the annual SS statement we all receive.

[ILLMAS]

The only way it will become a problem if the husband and wife were both self-employed, if not the employer always reports to SSA the correct figure, the IRS probably hasn't catch it since the combined wages match.

[Joel]

In verifying the SS # on the tax return the IRS only matches the first 4 letters in the LAST name. In your case a married couple with the same last name will always match when the numbers are reversed.

[Guest Taxed]

In verifying the SS # on the tax return the IRS only matches the first 4 letters in the LAST name. In your case a married couple with the same last name will always match when the numbers are reversed.

Excellent point. Did not think about that for a married couple with same lastname??

[GeneInAlabama]

Sometimes crazy things happen with SSNs. I had a friend that received a letter saying she owed more tax on income she received in California and she had never been in California. Turns out that two people had the SAME social security number. Both had the same first and last name which was a common name and both applied for their number in the same city within a week of each other. Apparently that was the only time their incomes got mixed up and I don't know which one ended up getting their social security number changed. That was about 30 years ago and the IRS computers weren't as capable then as they are now.

[jainen]

>>Do I have an argument in my favor that can give a little relief from this mistake?<<

Certainly. We have an enormously complicated system, and mistakes like this are expected and should be prepared for. The IRS has made it one of their top priorities this year. Although they emphasize one aspect by calling it "identity theft," obviously it is much broader than that. The question for you as a professional is how to fix it--not whose fault it was.

[Guest Taxed]

Jainen well said. I keep form 14039 handy and always recommend to my clients to file if they believe their identity was compromised (lost wallet, breakin etc.) The caveat is that refunds will be delayed but that is the price to pay these days when people are trying to rip you off blind!

I would be ok. if the system double checked identity for all returns involving refundable credits or refunds over a certain threshold amount. If there is a delay of say 90 days to get your refund so be it. That will force people to adjust their W4 also as a side benefit.

[Terry D EA]

Sometimes crazy things happen with SSNs. I had a friend that received a letter saying she owed more tax on income she received in California and she had never been in California. Turns out that two people had the SAME social security number. Both had the same first and last name which was a common name and both applied for their number in the same city within a week of each other. Apparently that was the only time their incomes got mixed up and I don't know which one ended up getting their social security number changed. That was about 30 years ago and the IRS computers weren't as capable then as they are now.

Hey Gene, I had this happen as well but it turned out that my client was a victim of identity theft. Two tax returns for each year for several years were filed with the same SS#. We could never get the return to go electroncially though and had to always mail it in. Took four or five years if I remember correctly to clear this up. This happened about 7 years ago. The guy suffered from alot more than tax woes.

[Lucho]

In verifying the SS # on the tax return the IRS only matches the first 4 letters in the LAST name. In your case a married couple with the same last name will always match when the numbers are reversed.

Good to know that.

thank you.

[Don in Upstate NY]

In verifying the SS # on the tax return the IRS only matches the first 4 letters in the LAST name. In your case a married couple with the same last name will always match when the numbers are reversed.

That's what I always thought also. But a search of irs.gov brings up this ...

A name control for an individual is generally the first four characters of the last name on the information return.

1. The name control consists of four alpha and/or numeric characters.

2. The hyphen (-) or a blank space are the only special characters allowed in the name control. These characters cannot be in the first position of the name control.

3. The name control can have less, but no more than four characters. Blanks may be present only as the last three positions of the name control.

4. If an individual has a hyphenated last name, the name control is the first four characters from the first of the two last names.

5. For joint returns, regardless of whether the payees use the same or different last names, the name control is the first four characters of the primary payees last name

This is from http://www.irs.gov/irb/2012-50_IRB/ar12.html Rev Proc 2012-49 and I'm not sure it applies to 1040s, but items 4 and 5 are not how it worked in the "old days".

[JohnH]

The fact that his SE tax was credited to his wife suggests that the SS numbers were reversed across the entire return. That type of mistake can span several years, so you might want to look at their prior and subsequent years' returns to see if the same error occurred. That type of mistake typically happens when you first set up the client or when you change software vendors, and then it just continues until something of this type calls your attention to it.

I'm not sure what kind of "relief" you are seeking, but I agree with jainen - this isn't about assigning blame, it's a matter of fixing the error.

[Guest Taxed]

>>For joint returns, regardless of whether the payees use the same or different last names, the name control is the first four characters of the primary payees last name<<

I guess that is the reason IRS does not recommend switching the order of the names in a MFJ return after initial year filing.

Over the years I have been asked quite a few times by the wife who makes way more money, or better educated than the husband as to why his name is first on the 1040 and they want to switch.