Amended Returns

[Yardley CPA]

An article from JOA...http://www.journalofaccountancy.com/News/201410503.htm

 

 

E-filing of amended returns, elimination of Form 1040X among TIGTA recommendations

By Sally P. Schreiber, J.D.

July 9, 2014

 

Taxpayers should be allowed to use Form 1040 to amend their returns and should be able to e-file amended returns, according to recommendations made by the Treasury Inspector General for Tax Administration (TIGTA) on Wednesday.

 

Although individual tax returns in the Form 1040 series may all be filed electronically, the IRS can only accept Form 1040X, Amended U.S. Individual Income Tax Return, on paper. According to TIGTA, more than 4 million amended returns were filed in 2012. Because these amended returns are on paper, they must be processed manually, which, TIGTA claims, leads to “potentially erroneous refunds” being paid.

 

In the statistical sample of 259 amended returns TIGTA examined, it found 44 returns with refunds totaling $103,270 that TIGTA believed could have been incorrect. From that number, TIGTA concluded that the IRS could pay out a potential $2.1 billion in erroneous refunds claimed on amended returns over the next five years and that the IRS could protect against this revenue loss by using the same systemic processes used to verify claims on originally filed tax returns to verify amended tax return claims. However, the IRS disagreed with these figures, stating that the flagged returns had been processed correctly and the validity of the claims on them could only be determined by an examination.

 

The IRS did agree with TIGTA’s suggestion that it accept e-filed amended returns, explaining that the ability to accept such returns has been a long-term goal. Nonetheless, the IRS pointed out that its ability to convert to e-filing amended returns depended on its receiving enough funding to implement the program, which is beyond the Service’s control.

 

TIGTA also was critical of the format and appearance of Form 1040X and recommended that the IRS revise Form 1040 to allow taxpayers to amend their returns using it instead of Form 1040X. Although the IRS did not agree with the recommendation, it did agree to consider revising Form 1040X so that the form provided more information to the IRS to use to verify refund claims. 

[Jack from Ohio]

This recommendation will be ignored. IRS has no current plans to incorporate e-filing of 1040X before 2018 at least. This from a person inside the IRS.

[SaraEA]

Of course the recommendation will be ignored because the IRS simply does not have the money.  Remember that they have endured significant cuts in their budget (not cuts in the rate of growth, but cuts in absolute dollars) over the past few years.  They have thousands fewer people working for them.  At the same time their workload has increased enormously.  ID theft has skyrocketed and they moved 3000 people to that unit, foreign account reporting is a big thrust that required training a lot of people (and is bringing in megabucks for the gov't), and they are responsible for a big chunk of the health care law (including stuff way out of their league like making sure hospitals do community needs assessments???).  The head of Criminal Investigation for our multi-state region said he used to have almost 30 agents working for him, now he has 16.  The IRS liaison in our area no longer has a cell phone.  (He is responsive to emails, however, so he's still trying to do his job.)  IRS people who used to come to meetings of NATP and NAEA no longer do because they have no travel budgets.  Personnel no longer answer tax law questions but refer callers to the website and pubs, we can't submit POAs through e-services anymore because there are not enough workers to weed out fraud, the practitioner hotline no longer gives us speedy access to anybody.  The IRS worked for a long time to use their resources most efficiently and had made giant strides in improving services.  The can't continue that pace, and have lost considerable ground, when the funding dried up.

 

TIGTA is always recommending ways to improve services that just aren't in the budget.  They recently discovered that the amounts people who pay alimony deduct don't come near matching the amounts recipients report.  Easy fix, right?  Reprogram the computers and send agents after these people.  IRS said no can do because the amounts they would recover would be dwarfed by what they'll get from assigning programmers and agents to ID theft or wherever.

 

 

It's like a psychiatrist telling you to take a year off of work to relieve stress.  Sounds great.  But how do you eat in the meantime?  TIGTA does a great job bringing problems to light, but they need to be more practical.  They should join the Taxpayer Advocate at congressional hearings and let policymakers know the nation's "accounts receivable" department needs the money to do its job.

[kcjenkins]

I'd feel a lot more sympathetic if they had not found money in their budget for those training videos and conferences.   The Internal Revenue Service acknowledged that the agency spent tens of millions of dollars in recent years on conferences for thousands of its employees.  

 

http://www.washingtonpost.com/blogs/post-politics/wp/2013/06/01/irs-training-videos-spoof-star-trek-gilligans-island-and-cupid-shuffle/

[Lee B]

In every large organization there are idiots& knuckleheads doing dumb stuff.

 

For every idiot there is usually 10 hardworking employees trying to do their job as best they can.

 

In my 38 years, I have only dealt with 1 or 2 IRS or ODR employees that were incompetent.

 

I don't say this to defend the IRS, but to try to keep some perspective.

 

Sara is correct, the IRS, given it's current workload and staffing will likely continue to have these problems and more of them.

 

K C, this will be like shooting fish in a barrel.

[kcjenkins]

In every large organization there are idiots& knuckleheads doing dumb stuff.

 

For every idiot there is usually 10 hardworking employees trying to do their job as best they can.

 

I totally agree with you on that, but it seems like recently those "idiots & knuckleheads doing dumb stuff" are the ones at the top, running the agency!  

[Jack from Ohio]

In every large organization there are idiots& knuckleheads doing dumb stuff.

 

For every idiot there is usually 10 hardworking employees trying to do their job as best they can.

 

In my 38 years, I have only dealt with 1 or 2 IRS or ODR employees that were incompetent.

 

I don't say this to defend the IRS, but to try to keep some perspective.

Does not apply to auditors!!

[kcjenkins]

Right.  It's not the folks in the field, in most cases, that are the problem.  Those of us who are 'old-timers' have known many fair, honest, hard-working, and principled auditors.  

 

But, just as a fish rots from the head down, if the corrupt people at the top are not dealt with fast, the corruption will spread down into the ranks, as more of the honest ones get fed up with it and leave, or get pushed out for not being "team players".