"Lost" IRS payments - anyone else?

[Patti in Upstate NY]

In the last month, I've heard from three clients who received a letter from IRS saying they didn't pay the amount due with their return.   The first one sent a check with a voucher, the check was converted to ACH and the bank records show "United States Treasury".  The other two were set up for electronic payment on 4/18/23 and the funds left their account on that day and IRS was confirmed as payee on bank statements. 

What is happening?  Anyone else seeing this?  Is it me?  Is it my software?

I realize when you look at the big picture, this is a small thing.  I did 275 returns last year and only three have an issue.  Unless you count the client I fired when I learned he was a lying liar who lied and deserves every IRS letter he gets.  Probably also deserves jail time but I digress.

Just curious if anyone else is seeing something similar and also wondering who else is considering saying "I'm done."  Because I'm pretty sure 2023 are the last returns I will prepare.   I staggered through PPP and Covid and I did taxes in my driveway for two years and I realized most people were not who I thought they were.  

It feels like April 15 here tonight

 

 

[Lee B]

I have discovered this year that the IRS has different subsystems that don't always communicate with each other.

In your client's situations, just because the IRS or the U S Treasury was the payee doesn't mean your client or your client's correct account was posted.

You or your client will have to call the IRS. You will need the transaction trace number for the IRS to track down where the payments went.

[mcbreck]

I had a client who's state pension had state tax withheld and the state demanded we provide proof via a copy of the 1099r. My 3rd party checkbox also magically disappeared for a LOT of clients on the state level.

I've had two clients who's W2 state tax withheld wasn't on their transcript and again we had to provide proof. They are a couple which makes it even more weird.

My state has this weird credit for food pantry donations where it is a terrific credit up to a certain yearly amount and then the credit transitions from a tax credit to an income deduction. No clue when the state has reached their yearly limit so my late filing clients usually don't get it, get an adjustment and blame me.

I've have multiple clients who've received adjustment letters and then adjustments reversing the previous adjustment. I absolutely hate adjustment letters that don't give a reason for the adjustment.

I roll over refunds for clients who pay estimated taxes. HATE it that clients don't tell me when they've had an adjustment and then for years they keep getting adjustment letters because every year my assumption that the amount rolled over was correct was actually wrong.

[schirallicpa]

3 hours ago, mcbreck said:

i roll over refunds for clients who pay estimated taxes. HATE it that clients don't tell me when they've had an adjustment and then for years they keep getting adjustment letters because every year my assumption that the amount rolled over was correct was actually wrong.

"oh - I thought you knew...."

[Medlin Software, Dennis]

For payroll taxes, I, for years, have advised (for those that deposit too much for some reason), to always ask for a refund, never a credit.  Credits often get applied to other taxes and cause issues later.

[Lee B]

1 hour ago, Medlin Software, Dennis said:

For payroll taxes, I, for years, have advised (for those that deposit too much for some reason), to always ask for a refund, never a credit.  Credits often get applied to other taxes and cause issues later.

Back in the spring of 2022 I had to call to Ogden UT to get a misapplied 941 credit corrected.

I ended up talking to a very helpful young lady. What was amazing to me was how many different IRS programs she had to access

in order to correct the misapplied credit. It took her about 25 minutes to apply the credit correctly.

[Patti in Upstate NY]

My problem is IRS is insisting we provide them with a copy of the front and back of the check.  There is no cancelled check, all I have are copies of bank statements showing "External Withdrawal IRS - USATAXPYMT"  They'e saying that's not good enough.  

The last time I called, I thought I was making progress but was disconnected without warning.  

[Lee B]

43 minutes ago, Patti in Upstate NY said:

My problem is IRS is insisting we provide them with a copy of the front and back of the check.  There is no cancelled check, all I have are copies of bank statements showing "External Withdrawal IRS - USATAXPYMT"  They'e saying that's not good enough.  

The last time I called, I thought I was making progress but was disconnected without warning.  

Your client's bank should be able to access the transaction trace # in their online details and print that information for your clients.

This convinces me  to advise my clients not to mail checks or to use direct debit anymore.

[Sara EA]

I use a small community bank, and even there all I have to do is click on the check number and up pops images of the front and back of the check.  Have your clients tried that?

[Catherine]

On 8/30/2023 at 8:23 AM, mcbreck said:

I had a client who's state pension had state tax withheld and the state demanded we provide proof via a copy of the 1099r.

I had a client with that issue, 3 years running. Ended up calling the state taxpayer advocate and reporting it as harassment of an elderly taxpayer. They stopped. I mean, fer gosh sakes, the state sends out the funds, collects their own tax, and sends the 1099-R, and the taxpayer has to prove it?! In what universe does that make any kind of sense whatsoever?

[TexTaxToo]

On 8/30/2023 at 7:57 PM, Sara EA said:

I use a small community bank, and even there all I have to do is click on the check number and up pops images of the front and back of the check.  Have your clients tried that?

My experience is that Treasury does not send checks through the system - they get converted to an electronic withdrawal - many other businesses do the same.  So the bank never sees the check and cannot provide an image.  There should still be a bank reference number.

[TexTaxToo]

And Form 1040-V (payment voucher) now contains this notice:

Quote

Notice to taxpayers presenting checks. When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.

 

[mcbreck]

15 hours ago, Catherine said:

I had a client with that issue, 3 years running. Ended up calling the state taxpayer advocate and reporting it as harassment of an elderly taxpayer. They stopped. I mean, fer gosh sakes, the state sends out the funds, collects their own tax, and sends the 1099-R, and the taxpayer has to prove it?! In what universe does that make any kind of sense whatsoever?

Seems rather rudimentary in the building of a tax collection system that someone's payments get applied to their account.