2021 IRS letters

[Marie]

Several clients are getting past due notices on their accounts for 2021.  Notices have no explanation and clients are frustrated not knowing what the penalty is for.  Anyway to find out except getting an 8821 and calling in and sitting on hold? 

[BrewOne]

you can input the notice number at the Taxpayer's Advocate office, might give you some info if this is a widespread issue.

https://www.taxpayeradvocate.irs.gov/notices-from-the-irs/

I thought the resumption of past due notices was for 2022, not 2021.

 

[Lee B]

Unfortunately, the original notices were suspended during COVID.

The IRS restarted sending out notices in February which is why clients are receiving these balance due notices now.

You will need to have your clients request a "Record of Account Transcript" which will show everything.

[Lee B]

Just now, BrewOne said:

you can input the notice number at the Taxpayer's Advocate office, might give you some info if this is a widespread issue.

https://www.taxpayeradvocate.irs.gov/notices-from-the-irs/

I thought the resumption of past due notices was for 2022, not 2021.

 

My understanding is that the the TAS doesn't involve themselves in this kind of situation.

[BrewOne]

right.  I was hopeful that TAS might have a memo on the notices, but it appears that their website is only providing generic info.

But I'll use this as another opportunity to beat the drum to go ahead and procure 8821's from your clients before an apparent need arises.  I have them on about 75% of my clients and I know of at least one preparer who requires an 8821 from all his clients.  I go through and check all of mine in October to see if there are any surprises waiting for my clients.  There are also companies who will monitor all this for you (if you've checked the 3rd party box on the 8821). Roger Nemeth (Bill's son) in Havana, FL has such a business.

[Lee B]

Brew One,

How do you go through and check them?

[BrewOne]

So, this fall (from the Transcript Delivery System), I'll request the 2023 "Record of Account" and "Wage and Income"--looking for zeroes on the Record of Account (negatives are good, that's money owed the taxpayer), and I'll note when the refund was funded or tax paid date. 

Wage and Income: I don't try to go through all the stock transactions, but make sure that other forms match up.  If a 5498 is present, I'll look at the client's age and whether RMD's were present or if they soon will be required.

Obviously, I don't do these all at once.  takes me awhile--after October 15 is a good time to start.

[jklcpa]

@BrewOne, I'm curious about how often you find issues by going through this exercise?  I have only one client where I feel this may be useful but have never done anything like this and haven't personally known any preparer that does. Maybe this is will be year I get this client a POA.

[BrewOne]

For the 2022 tax year, checking in October 2023, I found a 1099-NEC where my client's SSN was being used in California.  I also found a very large 1099-K for a client where her organization had mistakenly given her SSN to Square instead of the organization's EIN.  Lastly, I found a 5498 for a 74 year old client who had never taken money out of a Traditional IRA.  None of these clients had heard from the IRS.