Client with PTC and NOL carryover from 2012

[Cathy]

I submitted the following to ATX:

 

When creating an E-File for my client, I received the following error that will not let me create an e-file:

 

If Lines 8a and 8b are 0, taxpayer does not qualify for a credit.  Discard any information entered on lines 11-23 in columns A through E.

 

I informed ATX that on Line 6, in blue it refers client to a tab at the bottom of the form.  Client was able to check yes, therefore, I feel he is eligible for the PTC.  The NOL carryover is from the tax year of 2012.  

 

 

The Reply from ATX:

 

"The amounts in columns A and B need to be removed.  The taxpayer has to paid back the advanced credit received because of negative income.  The taxpayer should not have been eligible for health insurance through the marketplace because income was not at least 100% of the federal poverty level."

 

 

The above statement from ATX ignored the instructions on the tab all together!

 

 

Comments, please!

[Pacun]

I guess the exchange doesn't want to invest on people that qualify for medicare.

[jklcpa]

The response isn't surprising; it probably came from someone that isn't looking at the law but only their programming, and are also ignoring what you wrote.

 

Is it possible to override one of those boxes, either 8a or 8b, with a .01 so that it prints as -0- but the program thinks there's a figure higher than zero to allow creation of the e-file?

[Cathy]

Thanks, Judy!  I was able to create the E-File after I overrode Line 8a and entered $1.  It didn't change the additional PTC so it worked like a charm! 

 

Also, thanks for the confirmation to what I believed was correct.  Digging further, even the instructions on 8962 for Line 3 said to continue even if 2a and/or 2b were negative numbers.  If the total of the two is a negative number, the instructions said to enter a 0 on Line 3 and continue with the form.

 

Thanks again!

 

Cathy

[Cathy]

I guess the exchange doesn't want to invest on people that qualify for medicare.

 

Pacun, 

 

I believe you meant "medicaid" and no, my clients don't qualify for medicaid as their self employment income and other assets are way beyond medicaid's requirements.

[Cathy]

Just got another email from an ATX tech team telling me why my client doesn't qualify for a PTC...mainly because Line 3 is -0-.  It did say to contact again if I still felt them to be incorrect and they would forward the issue to another team.

 

I responded that I did still feel them to incorrect.  After I sent the email, I followed with a telephone call as I saw on the email at the bottom to call them if additional assistance was needed.

 

The person at ATX (not tech support, but the first line of customer service reps) I spoke with told me that I was correct and to enter a $1 in Box 8a and the return could then pass the E-File check system.  I told her one of my "associates" had already advised me to do just that...thanks again, Judy!  

 

Nice of her (lady at ATX), however, I stressed the fact that I'm not the only tax professional who will have a client with a NOL and their E-File error check needs to be corrected!  Will hang with it as long as time allows.  This kind of concerns me...a lot!

[jklcpa]

I'm glad it worked.  I wish they were all that easy to solve.

[Cathy]

My reply to ATX:

 

 

Yes, I do definitely believe that you are incorrect.  

 

Take a look at the instructions for Lines 2a and 2b.  It even says if one or both of the figures are negative, add them and if you have a negative result, enter -0- on Line 3 of Form 8962 and  continue with the form. If what you are asserting is correct, the form would state "if the total of Line 2a and 2b is a negative number, stop, you do not qualify for the credit.

 

Also, from your reply, it appears as you are ignoring the instructions for Line 6.  The tab it refers to '"Pt1 - HI FPL" is all about INCOME THAT IS BELOW 100% OF THE POVERTY LEVEL.  Thanks so much and I would greatly appreciate your forwarding the issue to another team.

 

 

 

In theory, I agree with your conclusion, however, I must complete the form per IRS rules and regulations and the Final Federal regulations dealing with the law itself. .   

 

 

I'm at my desk and will be for a long, long, long time today if someone wishes to call me. 

 

Sincerely, 

Cathy Dauthier

[Cathy]

If it wasn't so close to 4-15th, this may be amusing.

 

ATX's Response after my email above:

 

Good Afternoon,

The amounts in columns A and B need to be removed just leave column F. The taxpayer has to paid back the advanced credit received because of negative income. I understand you check the box on line 6 that they qualify for the credit but they don't because there is no calculation made on lines 8a and 8b. The program is working as designed, once you removed the amounts on column A and B of form 8962 the error will dissapear.

If you need further assistance, please feel free to contact our Customer Service Dept at  800-638-8291 or email at[email protected]

 

 

 

My Response to the above response:

 

Have any of you read the instructions?  Evidently not. I have throughly read the instructions to Form 8962 and Federal Register Vol. 77., No 100 which are the Final regulations from IRS dealing with the Health Insurance Premium Tax Credit.  

 

Once again, I encourage you to read the instructions for each line of Form 8962, paying special attention to Line 3, Line 6 which refers you to the exception when your income isn't at least 100% of the Poverty Level.  If you check yes on Line 6, you are told to continue to Line 7.

 

Line 7 gives you the applicable percentage from the tables in the instructions for income for income below the poverty level which is .0200.

 

Lines 8a is -0- as per the instructions, Line 3 which is -0- multiplied by Line .0200 = 0.  That means the client's annual contribution rate is -0-, and furthermore calculates to -0- then for his monthly contribution.  There are clients who receive their health insurance free of charge from Healthcare.gov.  Does the form say "Stop here, you cannot take the credit....you must pay back every penney you paid in?  Of course not, as the most my client would have to pay back is $600 if he did not follow the instructions.

 

Part 2, My client checks No, then instructions tells him to continue to Line 10.

 

Line 10, my client checks No because he didn't have coverage for the entire year.  The instructions then tells my client to Continue to lines 12-23.  Compute your monthly PTC and Continue to Line 24.  

 

He then completes Lines 25 and 26  (The program completes 24, 25 and 26).

 

 

Can ATX contact your contact with IRS to verify your and my position?  I have had many, many other tax professionals whom agree with me and I would hate to see ATX be responsible for disallowing the PTC for my or many more other taxpayers who are in the same situation.  I will override your form if necessary, I just think it would be a shame for other taxpayers not to be able to take the credit because of ATX.

 

Please tell me in the instructions where it says my client is not eligible for a PTC.

 

 

I know this is all new and has almost driven people over the edge, so I don't fault ATX for the program glitch.  I just sincerely wish I could receive a response from ATX that could be backed up with 8962 instructions as I have done in trying to prove my point.

 

Thanks!

Cathy Dauthier

[Lion EA]

You go, girl !!

[jklcpa]

But, but  "...the program is working as designed."    That's true, right?  It just has a design flaw.     /s

[Cathy]

That's right! And IRS approved ATX's "design flaw" before it released the form. (NOT)

[Cathy]

Just to update:  I talked to a specialist with the PTC at IRS and he agreed with the calculations Form 8962 made and also agreed that the error check for E-File should not have stopped the return from processing the E-File.

 

I asked him about overriding Line 8a after I told him I was concerned that if I would send in a paper return, the data entry personnel would not complete the form properly.  He then stated that the most important thing was to get an accurate result, and if overriding Line 8a by $1.00 would give the accurate result, then do it.  He also said he could understand my thoughts in sending in a paper return.

 

This is probably the first time I've called IRS in years, but I thought I might be able to luck up and get a PTC specialist since this was so new.  I had to wait about an hour and 30 minutes for the PTC line to talk to someone, but I'm glad I did. 

 

I will inform ATX of my conversation and tell them the ball is in their court now as to whether they are going to let their personal feelings about who should get a PTC interfere with their software functionality.  I have the work around....but there are going to be other taxpayers who pay the credit back needlessly because of ATX's software.  It's time I move on to another software company.

[jklcpa]

I was curious about how Drake would handle this so I used one of their training returns to test this. I entered enough NOL c/f to create a negative # on the front of the 1040. The form 8962 shows that on line 3 and has -0-s on both lines 8a and 8b.  It allowed the credit, did not require me to check any box to force the credit, and gave no warning notes.  

[Cathy]

Thanks, Judy.  I've made up my mind that I'll be using Drake next year.  I've had enough!

 

If the taxpayer's MAGI is $20 due to $18,000 in wages and other type income combined with an unexpected rental loss of $17,980, Line 3 is $20. Lines 8a and 8b will be -0-.  As the taxpayer was able to check "YES" on Line 6, he is eligible for the PTC...and it is going to be based on 100% of the monthly premium in column B (assuming column B is less than column A), like it or not!

 

But wait......ATX has decided he is not worthy of the credit as the error check tells the taxpayer:  "If Lines 8a and 8b are 0, taxpayer does not qualify for a credit. Discard any information entered on lines 11-23 in columns A through E."

 

I pointed out the above scenario to ATX after their latest and then my last correspondence to them...anyway, I suggested that they need to seek legal counsel as their software is barring certain taxpayers from receiving the PTC.   It really is bold of ATX to use that as an error, especially since NOTHING in the instructions says ""If Lines 8a and 8b are 0, taxpayer does not qualify for a credit."

[mcb39]

I wish I had read this conversation before I filed a return with an NOL that did not allow the refund of the PTC.  I had to get that return finished and knew that it was wrong, but couldn't get it to file.  Will amend after I get caught up.