Taxable Talk

With the IRS being basically closed, some services are still available. Tonight I was able to log into e-services and print a transcript for a client–a client I already had a Power of Attorney for. Yesterday, a new client came in needing back tax returns prepared; he’s on hold until we can obtain transcripts. He’ll probably have his bank records prior to his transcripts (and those will take two to four weeks).

Another piece of mixed news: Audits have been put on hold. The bad is that I had two audits last week that will almost certainly result in “No Change” letters…eventually.

A piece of bad news: Automated Underreporting (AUR) Notices will continue. They’re automated, so there’s no stopping them. These are notices like the CP2000. What if you need more time, or the notice makes no sense? A year ago, a client received a CP2000 that alleged he owed additional tax. In the “Information to Review” section was this helpful piece of information, “We have no information for you.” When I called the IRS up and explained my difficulty in responding, the woman who answered agreed that it was hard in this case to respond. The IRS issued a second (corrected) CP2000 that explained what they thought was happening, and my client could respond appropriately.

Now though, there’s no way to get that help. Worse, the deadlines still exist. So what should a taxpayer do? Respond to the notice using certified mail, return receipt requested. In the above situation, I’d write a letter stating that the notice makes no sense (enclosing a copy of the notice and any other backup information.) If the shutdown is brief, this won’t be a big deal. If it’s lengthy, this could end up being a mess. Let’s say Joe Taxpayer receives a CP2000 on October 2nd. He responds on October 22nd but the envelope is never opened. Will a second notice be sent out? Will a Notice of Deficiency follow even though the taxpayer has disputed the notice? Hopefully, the shutdown won’t last that long and this will be a non-issue. (I’d expect the IRS to stop issuing CP2000 notices if this drags into weeks.)

Of course, twice this year the IRS has lost responses I sent in to notices (and I had proof the IRS received the responses), so maybe the shutdown will improve things.

Finally, tax returns are still due on October 15th. If you don’t file electronically, make sure you mail your returns using certified mail, return receipt requested.

Apparently the Republicans and Democrats couldn’t get their heads together yesterday, and the government has partially shut down. What does that mean for taxes?

Your tax returns on extension are still due on October 15th. That deadline is statutory, so nothing changes.

If you received an IRS notice, the deadline still applies. Just don’t expect to get a response in an expedient fashion.

The IRS help lines are closed. This includes most walk-in centers and the 800 numbers. Given that IRS help over the phone is often wrong, this may be a blessing for some. However, where it will hurt is the ability to order transcripts. Let’s say John comes into my office and wants to get current with his taxes. I can’t order transcripts until the IRS processes the Power of Attorney…and that’s not going to happen.

Your audit isn’t happening. IRS examinations will be on hold. Again, this does not change the deadline for responding to correspondence exams, but that face-to-face audit will need to be rescheduled.

Based on what I’ve read, Tax Court remains open. This likely means that appeals related to Tax Court will continue.

The government has shut down 17 times since the mid-1970s. We’re still here, and I expect we’ll be here whenever this shutdown ends.