Client received a letter from the IRS asking for proof of withholding.

[M7047]

Has anyone had a client get a letter from the IRS that asked for proof of withholding.? The only income they have is a pension and social security. Both have federal taxes withheld, but wouldn't the IRS already have the amount on their end?

[Yardley CPA]

4 minutes ago, M7047 said:

Has anyone had a client get a letter from the IRS that asked for proof of withholding.? The only income they have is a pension and social security. Both have federal taxes withheld, but wouldn't the IRS already have the amount on their end?

I have.  We supplied a copy of the W2 / 1099, showing the withholdings.  That satisfied their inquiry.  

[M7047]

I can do that. I just thought it was weird they were asking for that when they would have received the federal copy of the 1099 and should also have social security on file. It seemed weird they would ask for info they should have already, when they are understaffed.

[BulldogTom]

3 hours ago, M7047 said:

It seemed weird they would ask for info they should have already

Unless the pension file did not get uploaded into the IRS computers correctly and there is a mismatch between the return and what they have?

Tom
Longview, TX

[M7047]

17 minutes ago, BulldogTom said:

Unless the pension file did not get uploaded into the IRS computers correctly and there is a mismatch between the return and what they have?

Tom
Longview, TX

That makes sense. Thanks!

[grandmabee]

I just read on another board that tiga put out a report that IRS shredded over 30 million information returns last year because they couldn't get them processed.  We may be seeing a lot of these request.

[Pacun]

If I am not mistaken, the IRS gets everything together in December. 

They trust the W2s have the withholding claimed but the IRS doesn't have proof of that, hence they send fraudulent refunds with invented W2s. 

[Donnarae]

11 hours ago, M7047 said:

Has anyone had a client get a letter from the IRS that asked for proof of withholding.? The only income they have is a pension and social security. Both have federal taxes withheld, but wouldn't the IRS already have the amount on their end?

Yes, our office had one today. 
 

possi

[Sara EA]

I had one where IRS wanted all the clients' tax docs.  All were the type already reported to IRS like 1099Rs, INT, DiV, etc.  I didn't tell the client, but my suspicion was that another return had been filed for these people and IRS was trying to determine who was the real taxpayer.  (The fraudster wouldn't have the original docs that exactly matched the real return.)

I think grandmabee and Pacun's posts expose conspiracy theories that may be circulating.  Hopefully this kind of information doesn't go viral.  Our clients read that stuff.

[Pacun]

I guess the IRS has never sent refund for returns that are fraudulent and use fake W-2. Sorry for spreading that conspiracy theory.

[ILLMAS]

I personally received one, I do some consulting work and I request for all my earnings to be sent to my federal withholding, COVID hit and the irs never processed the 2019 1099s, I resolved it by sending in a copy.

[schirallicpa]

18 hours ago, grandmabee said:

I just read on another board that tiga put out a report that IRS shredded over 30 million information returns last year because they couldn't get them processed.  We may be seeing a lot of these request.

where did you hear/see this?  That's an interesting mess.

[Catherine]

MassDOR is famous for demanding proof of withheld tax from the Mass Teachers Retirement system. Who administers that system, sends out the payments, and withholds the taxes?

If you said MassDOR, you'd be 100% correct!  

So they ask retired teachers to prove to MassDOR that MassDOR withheld the tax they say they withheld.  One poor lady they demanded the same thing every year for about four (or five, or six) years, when I finally got a POA from her and lambasted them for harassing her. Politely, but I reamed them one.  They did not ask the next year...

[Sara EA]

On 3/7/2022 at 8:03 PM, Pacun said:

the IRS gets everything together in December

Pacun, I guess I didn't understand what you meant by IRS getting everything together in December.  Sounded like they were predetermining everyone's income and withholding.  Of course they issue refunds to fake returns, but that has been reduced a lot because now they don't issue refunds with refundable credits until later in Feb, when employers' filings are in the system and they can match with the tax return.  We had an interesting fake W2 in our office last year--a handwritten W2 from a city.  Now there are a lot of small cities in the state, but I don't think one of them has issued handwritten W2s for a couple of decades!  Needless to say, that return didn't get filed, at least not by us.

[Slippery Pencil]

14 hours ago, schirallicpa said:

where did you hear/see this?  That's an interesting mess.

https://tscpafederal.typepad.com/blog/2022/03/will-the-irs-destroy-30-million-unprocessed-tax-returns-again-this-filing-season.html

https://www.treasury.gov/tigta/auditreports/2021reports/202146064fr.pdf  p8-9 of the report (p12-13 of the pdf)

[Abby Normal]

18 hours ago, Catherine said:

MassDOR is famous for demanding proof of withheld tax from the Mass Teachers Retirement system. Who administers that system, sends out the payments, and withholds the taxes?

If you said MassDOR, you'd be 100% correct! 

I was filing a late MD return with only an IRS transcript. MD asked for copies of the W2s, so to mock up a W2 to feed the bureaucracy, I had to call MD and ask THEM how much MD withholding there was on each W2. I think I just edited a PDF of the IRS transcript to add a line for MD withholding and MD processed the return. And, yes, that does sound like the basis for a Monty Python sketch.

[Sara EA]

Thanks for the link.  The TIGTA report is a real eye opener.  IRS did indeed destroy loads of paper filed information returns, betting that the risk of needing them in any eventual audit was minimal compared with the risks created by not doing all the other things employees had to do instead of processing this paperwork.  As we all look at the piles of work towering over us right now, this report makes me feel like I have no right to complain.  The overworked IRS employees are facing what we have times millions; it's a wonder they can even find their desks.

[Catherine]

On 3/9/2022 at 9:02 AM, Abby Normal said:

MD asked for copies of the W2s

I never made mock-ups of W2s, but when preparing returns from transcripts, of course there's no state withholding. A call to MassDOR would invariably get the answer, "We don't have any information on tax withheld." So I'd make up a reasonable sounding amount, and we'd file the return.  Funnily enough, MassDOR would always know the correct amount and adjust as needed.  They just won't let anyone else know it, in advance.  I tell you if they were competent they'd be dangerous!