Corrected 1099-DIV

[GLJEANNE]

RBC just sent out a corrected 1099-DIV, less than a week after I filed client.    It's mostly lowering the amount of Qualified Dividends.  It would be a whopping $6 additional tax owed.

What would be the drawbacks of telling the clients to just let the IRS bill them?  I really hate to charge them for an amended return over a piddly $6. 

RBC really pisses me off, not the first time I've seen them send out corrections this late. 

[Abby Normal]

I've never amended for one of these corrected 1099s and I've never gotten any notices. I'm not certain that the IRS ever posts these corrected 1099s, and even if they did, they don't send out notices for smaller amounts. I heard they run the matching software later in the year, then sort the notices by amounts from high to low, and only send out as many CP2000s as they know they can process, starting with the highest amounts. 

And with what is happening now, there will be even fewer CP2000s going out.

[GLJEANNE]

13 minutes ago, Abby Normal said:

I've never amended for one of these corrected 1099s and I've never gotten any notices. I'm not certain that the IRS ever posts these corrected 1099s, and even if they did, they don't send out notices for smaller amounts. I heard they run the matching software later in the year, then sort the notices by amounts from high to low, and only send out as many CP2000s as they know they can process, starting with the highest amounts. 

And with what is happening now, there will be even fewer CP2000s going out.

Or the CP2000s will be going out later and later, which will be fun.

That was kind of my take on it, that they likely wouldn't even bother. Other years when I've seen late corrections, it's never been anything that mattered to  what folks owe.  But they're still a pain to have to check every time, and they throw TPs into a panic at the thought that something's wrong. 

[kathyc2]

18 hours ago, Abby Normal said:

only send out as many CP2000s as they know they can process

Interesting.  Curious where you heard that???

[Abby Normal]

27 minutes ago, kathyc2 said:

Interesting.  Curious where you heard that???

Read it in a magazine article a few years ago. It made sense because most of the CP2000s I was seeing were for at least 1,000.

[mcbreck]

RBC isn't the problem - they are using the data given to them by the Depository Trust Company which process all the payments. A lot of times it's dividends being reclassified as non-taxable distributions and that impacts other totals (or the reverse). A dividend is required to come from profits of the company and if they declare a loss, the dividend pay get classified as a non-dividend payment. Some REITS technically lose money but pay massive dividends and those are where the problems exist (usually).

[Max W]

Unless the change in taxable amount is more than $50, or the change in tax is more than $14, a CP2000 will not be issued. 

[jklcpa]

2 hours ago, Max W said:

Unless the change in taxable amount is more than $50, or the change in tax is more than $14, a CP2000 will not be issued. 

Those are the amounts for when a new 8879 needs to be signed if we find a correction to the return after the original 8879 is signed.

I've never heard these same amounts concerning CP2000 notices. Can someone else confirm what MaxW said?

[Lee B]

I just did some extensive online searching and didn't find anything.

[Gail in Virginia]

And one point in time, many years ago, I believe that an IRS agent told us that the amount of income was $100 and tax was $10, but my memory isn't what it used to be so I might have those amounts slightly wrong.  But I am reasonably sure that there is an amount that makes it not worth their trouble.  However, this assumes that everything else on the return is going to match their records and therefore this amount won't be added to some other change to cause them to send the CP notice. As my mama used to say, you pay your money and you take your chance. 

[joanmcq]

I just got a K1 in with a whopping $39 in income.  Wasn't planning on amending.

[Catherine]

When the amounts are this small, I tell the client to run any IRS letter by me first, to make sure it's correct. Then I can confirm for them to pay the additional tax requested.

Way easier than amending, and the letters only come through about half the time. According to Eric Green (TaxRepNetwork; he has lots of contacts in the agency) they are concentrating enforcement in areas where they get a bigger bang for their effort-buck. The folks who owe $600, not $6. The non-filers with W2s in the 100's of thousands, not 24k.