Tax & Business Insights

Nailing Jell-O® to the Wall?

Volume 12 Issue 2 --  March/April 2000

Nailing Jell-O® to the wall may be a challenge, but it is no more difficult than getting records and information from the IRS! Through our associate law firm, Newland & Associates, PLC, we regularly deal with the IRS Service Centers and various other IRS offices.

The responses we routinely receive from the IRS to our requests for documents and information are alarmingly inconsistent. For example, consider the difficulties encountered when trying to obtain taxpayer transcripts.

How do you determine if your client has tax credits stemming from withholding or estimated tax payments?

You could ask your client and get the inevitable forlorn look indicating the chances of his having such records are as remote as successfully nailing you know what to the wall. In some cases, clients do not even remember if they filed returns for particular years.

Often, the only way to determine if returns were filed, or estimated credits paid, is to get a transcript from the IRS. A transcript is a computerized record of when returns were filed, by whom, filing status, dates of filing, assessments, payments, credits, and other information.

In other words, a transcript is a chronology of tax events, or non-events, for a taxpayer arranged by year. The IRS usually maintains transcripts for most open years where there are unfiled returns or unpaid taxes.

So How Do You Get Transcripts?

There is a one-page IRS Form 4506 called Request for Copy or Transcript of Tax Form. Item 8 instructs you to “Check only one box to show what you want. There is no charge for items 8a [transcript], b [verification of nonfiling], or c [W-2 information].” The only charge is for copies of returns [Item 8d ], which cost $23 each.

Despite the simplicity of Form 4506, requests for transcripts [option 8a], have repeatedly been returned, boldly stamped “REJECTED” for lack of payment B when no payment is required! Usually the attachments to the response indicate that the IRS employee processing the request did not read the form.

For example, in December, 1999, we filed a Form 4506 and received a response in March, 2000, informing us, as usual, that a request for a transcript was rejected because payment was not enclosed. In a subsequent telephone call to the IRS Service Center concerning the requested transcript, we were informed there were no transcripts for that year.

Luckily, in January, 2000, we had called the local revenue officer (with whom the taxpayer=s installment payment agreement had been negotiated) and asked for the transcript. It was furnished to us in about a week, without charge!

When we complained to the District Director's office about the confusing responses, we were told NOT to use the Form 4506 to request transcripts! Instead, we were told to fax (don't write or call) a request to the IRS Practitioner Hotline!

The suggestion by the District Director’s office not to mail Form 4506 is in direct contradiction to the instructions on the back of the Form. A few days later, when I talked with a Supervisor at the Philadelphia Service Center, I was advised to follow yet a different procedure!

In another non-filing matter, after we requested transcripts from the Service Center, we received a written response that no transcripts were available for 1993 and 1994. For the years, 1995 and 1996, we received an unrequested summary of what the non-filed returns reflected, which was, of course, all “zeros!”

Responses from the IRS Service Center often generate bewildering and inconsistent responses. Some IRS employees resolutely state that there are no transcripts available prior to 1995, while others claim there are always transcripts for all years where tax is due or returns are not yet filed. It seems communication among the Service Centers, regional offices, and the public is woeful.

While it is easy to launch diatribes about IRS blunders and inconsistencies, this accomplishes little. What are practitioners to do? Don't take an initial “no” for an answer when you are trying to obtain essential records. If the matter warrants further effort, try different IRS offices and employees.

Copyright 2000
By Tax and Business Professionals, Inc.
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