Documenti di Didattica
Documenti di Professioni
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T
he IRS is changing improvements to our system of tax paper. In
to meet the de- administration. As a result of a great deal addition, we
mands of our of effort, were in a far different situation have a Taxpayer
changing economy. In this today than we were last year or the year Authorization
edition of TAX HINTS, you before. To a considerable extent, the Form through
will find some information foundation of the new IRS has been laid, which taxpayers
that will help you navigate and we must now take the next step and can give an
the new IRS and antici- successfully execute our plans for the electronic return Charles O. Rossotti
pate some of the issues 2001 filing season. originator the Commissioner of
emerging for the 2001 One of our biggest goals for this authority to enter Internal Revenue
filing season. coming filing season is to conduct most of their PIN Code.
This is the first elec- our internal and external transactions This past filing season, more electronic
tronic newsletter for electronically. To meet this objective, we payments options were made available.
practitioners that has been must make it not only technologically These include accepting debit payments
produced jointly by the possible, but also attractive to the public through TeleFile and accepting credit
IRS service centers and to make a permanent change from paper cards for Forms 1040ES, estimated tax
National Headquarters. to electronic means. Toward that end, here payments, and Forms 4868, extensions
This document contains are some of the things were rolling out of time to file. We will continue to offer
information about the new this year and planning for the future. these options and build on these suc-
structure of the IRS, For the 2001 filing season, we are cesses.
including points of adding 23 additional forms to the 1040 Were prototyping a secure messaging
contact. It also explains e-file program. We plan to roll out the system that will provide participating
changes for the upcoming remaining 40 forms and schedules for practitioners with a Web-based means
filing season and offers 2002. This means we will open e-file for resolving account-related issues.
hints about how to make it eligibility to 99.1 percent of all taxpay- One of our major priorities is to build a
a smooth one. ers, potentially adding 3.8 million new secure infrastructure that will permit
We hope the hints and e-filers to the growing rolls. authorized practitioners to exchange
suggestions you find here The IRS will eliminate the requirement information with the IRS through the
will make your job easier, for a separate paper document with the Internet.
and that experiences with e-file return. The IRS has successfully We have much to show for these three
IRS service centers will be tested the use of a PIN code as the years. Although we can be proud of these
pleasant and helpful to taxpayers signature. With a few accomplishments, we cant be satisfied.
you and your clients. exceptions, the 2001 filing season The real work has just begun, and Im
program will extend this option to all
IRS
convinced that if we stay the course, we
taxpayers nationwide who will be able will succeed. I wish you all the best for the
Department of the Treasury
to select their own PIN, then file upcoming filing season.
Internal Revenue Service
www.irs.gov/
Practitioners Guide to Filing Season
T
requiring sophisticated tax
planning such as corporations, he IRS is offering a new, daily Common errors.
sub-chapter S corporations and series of Tax Tips for the 2001
Mortage implications of alimony
partnerships with assets greater filing season.
payments.
than $5 million. (www.irs.gov/ IRS Tax Tips offer concise, useful
information on topics affecting millions More than 70 Tax Tips are
bus_info/tax_pro/iod/6/
of taxpayers. These easy-to-read tips available, a new one for each
index.html)
cover a wide range of topics, from child business day until the April tax
Tax Exempt and credits and higher education benefits to deadline. (One early tip this
Government Entities Individual Retirement Accounts and years due date for returns is April
Contacts points for questions Social Security issues. 16 because April 15 falls on a
about returns pertaining to Sunday.)
Sample topics include:
Employee Plans, Exempt Organi- The Tax Tips are available at the
Free tax help from the IRS.
zations and Government Entities. IRS Web site at www.irs.gov under
(www.irs.gov/bus_info/ What to do if you cant pay your tax. the IRS Newsstand section or find
tax_pro/iod/7/index.html) Education credits. the tips by going directly to
Charitable contributions. www.irs.gov/prod/news/tips.html
LMSB At-a-Glance
Mission: Arlene Kay Paul DeNard
The Large & Mid-Size Business Director, Quality Assurance and Director, Field Operations
Operating Division will be a world Performance Management New York, NY
class organization responsive to the Gerald Reese Marsha Ramirez
needs of customers in a global Director, Prefiling and Technical Director, Field Operations
environment, while applying Guidance Downers Grove, IL
innovative approaches to customer Dick Teed Mary Tapley
service and compliance. It will Deputy Director, Strategy, Research Director, Field Operations
apply the tax law with integrity and Program Planning Laguna Niguel, CA
and fairness through a highly Susan Linden
skilled workforce, and will foster Heavy Manufacturing, Construc-
Director, Communications & Liaison tion & Transportation
an environment of inclusion where
Jim OMalley Thomas J. Smith
each employee can make a maxi-
Director, Management and Finance Industry Director
mum contribution to the mission of
the team. Jim Gaul Springfield, NJ
Division Information Officer Karen Ammons
Strategic Priorities: Julie Rushin Director, Field Operations
Globalization Build a tax Director, Business Systems Planning Springfield, NJ
administration to effectively deal JoAnne Johnson-Shaw
with the global economy. Jack Schroeder
Director, EEO & Diversity Director, Field Operations
Issue Management Develop a
strategy to resolve disputes Industry Operations: Detroit, MI
sooner with taxpayers or Retailers, Food and Pharmaceutical Joe Brimacombe
eliminate controversy sooner in Robert E. Brazzil Director, Field Operations
the process. Industry Director Laguna Niguel, CA
Employee Skills and Satisfac- Downers Grove, IL Communications, Technology &
tion Recruit and retain a Richard Goelz Media
highly qualified, skilled and Director, Field Operations Thomas R. Wilson, Jr.
satisfied workforce. Downers Grove, IL Industry Director
Abusive Corporate Tax Shelters Kathy Petronchak Oakland, CA
Strengthen our ability to deal Director, Field Operations Joann Bank
with corporate tax shelters. Laguna Niguel, CA Director
Management Team: Natural Resources Field Operations
Larry R. Langdon Bobby L. Scott Oakland, CA
Commissioner Industry Director Customer Profile:
Deborah M. Nolan Houston, TX Corporations, Subchapter S
Deputy Commissioner Paul Cordova corporations and partnerships
Director, Field Operations with more than $5 million in
LMSB Headquarters Office: assets.
Houston TX
New Mint Building, 4th Floor The largest business taxpayers
801 9th St. NW Steve Burgess
Director, Field Operations interact with the IRS on an
Washington, DC 20001 ongoing basis.
Springfield NJ
Carol Dunahoo Most have in-house tax divi-
Financial Services & Healthcare sions.
Director, International
David B. Robison
Keith Jones Industry Director Major issues are tax law interpreta-
Director, Field Specialists New York, NY tion, accounting and regulatory
issues. Many operate in a global
environment.
SB/SE At-a-Glance
Mission: Bobby Hunt Taxpayer Profile:
The mission of the Small Deputy Director, Taxpayer Approximately 45 million
Business/Self-Employed (SB/ Education and Communication taxpayers.
SE) Operating Division is to John Ressler About 33 million full or
provide SB/SE customers top- Director, Customer Account partially self-employed.
quality service by educating Services About 7 million small
and informing them of their tax businesses with assets of $5
Brien Downing
obligations, developing educa- million or less.
Deputy Director, Customer
tional products and services, Have some of the most
Account Services
and helping them understand complex issues due to tax
and comply with applicable Glenn Henderson law requirements and the
laws, and to protect the public Director, Compliance number of forms and sched-
interest by applying the tax law Tom Hull ules required.
with integrity and fairness to Deputy Director, Compliance Have 460 routine transac-
all. Chuck Peterson tions with the IRS per year
Strategic Priorities: Director, Strategy Program The SB/SE Operating Divi-
Meet the publics expecta- Planning and Quality sion will serve this taxpayer
tions by always being re- Rob Wilkerson segment through three orga-
sponsive and always per- Director, Business Systems nizations:
forming with integrity when Planning Taxpayer Education and
dealing with customers. Rich Morgante Communication (TEC): a
Recognize the need for Director, Management and customer-focused organiza-
continuous training, skills Finance tion that will continuously
enhancement and open research and analyze tax-
JoAnn Innis
communications between payer trends to ensure that
Director, EEO and Diversity
employees and management. products and services are
Encourage compliance by Heather Rosenker tailored to meet the needs of
partnering with the taxpayer Director, Communications SB/SE taxpayers.
from the start-up business Kevin Brown Customer Account Services
phase and throughout the Division Counsel (SB/SE) (CAS): focus on processing
business life cycle. Charles Valentino returns timely and accu-
Stabilize and improve Division Information Officer rately, assisting taxpayers
business results. with account specific ques-
Area Headquarters Offices: tions and adjusting accounts
Headquarters: Baltimore, Dallas, Jacksonville, when necessary.
New Carrollton, Maryland Nashville, Seattle, Boston, Compliance: focus on
Management Team: Denver, Laguna Niguel, Philadel- problem prevention and
Joseph Kehoe phia, St. Paul, Chicago, Detroit, early intervention to increase
Commissioner Manhattan, San Francisco Bay overall compliance and
area, Washington, International fairness by providing educa-
Dale Hart
area office in Puerto Rico, Field tional guidance and outreach
Deputy Commissioner
Offices throughout the nation programs focusing on small
Jerry Songy
business needs.
Director, Taxpayer Education
and Communication
W&I At-a-Glance
Mission: ance processes. Ron Watson
Wage and Investment Operating Improving electronic filing and Director, Customer Account Services
Division (W&I) will educate and communications services. Jane Warriner
assist our customers in understand- Provide the W&I workforce with Director, Compliance
ing and satisfying their tax responsi- the necessary tools for servicing Terry Lutes
bilities. We will provide this service taxpayers and administering the Director, Electronic Tax
in a high quality, fair and equitable tax code and enhance employee Administration
manner through partnership between skills through training.
Area Headquarters Offices:
management, employees and stake- Headquarters: Hartford, Indianapolis, St. Louis,
holders. Atlanta, Georgia Greensboro, New Orleans, San
Strategic Priorities: Francisco Bay area.
Meeting demands for assistance Management Team:
by providing better and more John Dalrymple Commissioner Taxpayer Profile:
specialized services to individual John Duder Some 90 million filers, represent-
taxpayers and emphasis on Deputy Commissioner ing 116 million customers,
customer segment needs. Linda Stiff including those who file jointly.
Earlier and more accurate account Senior Operations Advisor Most pay taxes through
resolution through integrated case withholdings and interact with the
Ty Ayers IRS once a yaer.
processing and utilization of Director, Communications, Assis-
linkages within the service. More than half prepare their own
tance, Research and Education returns and receive refunds.
Implementing appropriate compli-
TE/GE At-a-Glance
Mission: To provide TE/GE custom- Darlene R. Berthod organizations and municipalities
ers top quality service by helping Deputy Commissioner to major universities, huge
them understand and comply with Carol D. Gold pension funds, state governments
applicable tax laws and to protect Director, Employee Plans and complex tax exempt bond
the public interest by applying the deals.
Steven T. Miller
tax law with integrity and fairness to Pay more than $220 billion in
Director, Exempt Organizations
all. employment tax and income tax
Edward J. Weiler withholding.
Strategic Priorities:
Director, Government Entities Control $6.7 trillion in assets.
Ensure the accuracy of the
John Ricketts Employee Plans taxpayers
Exempt Organizations Master
Director, Customer Accounts Service represent private and public
File.
Steve Pyrek retirement plans with $4.1 trillion
Address Employee Plans determi-
Dir., Communications & Liaison in assets.
nation workload.
Establish Government Entities Operating Units Headquarters: Exempt Organization taxpayers
organization and programs. Headquarters, Washington, DC represent more than 1.5 million
Recruit, develop and retain a Customer Account Services, Cincin- tax exempt organizations, includ-
highly qualified and skilled nati ing 350,000 religious organiza-
workforce. EP Exam Headquarters, Baltimore tions with $1.3 trillion in assets.
Headquarters: EO Exam Headquarters, Dallas Government Entities taxpayers
Washington, DC GE Headquarters, Washington, DC include outstanding tax exempt
bonds with a total value of $1.4
Leadership Team: Customer Profile: trillion, 86,000 federal, state and
Evelyn A. Petschek 3 million customers that range local entities and more than 550
Commissioner from small local community federally recognized Indian tribes.
E
nter all the required Form 1040A cover of the instruction booklet or the
information to insure Beginning in 2000, certain capital chart on pages 9 and 10.
the refund is credited gain distributions can be reported on
Standard mileage rate
to the correct bank account. line 10 of Form 1040A. Because of
The rate for business use of a vehicle
If an incorrect bank account this change, there is a conflict with
during 2000 is 321/2 cents per mile.
number and/or Routing the caution included in the instruc-
Transit Number (RTN) is tions on the back of Copy B of the Earned Income
entered by the taxpayer, 2000 Form 1099-DIV. The caution Credit (EIC)
preparer or electronic return tells recipients if there is an amount You may be able to take this credit if
originator, the IRS does not in Box 2a (total capital gain distri- you earned income and modified
have the authority to recover butions), they must file Form 1040 adjusted gross income are less than
the refund from the account and cannot use Form 1040A. $31,152 (less than $10,380 if you do
holder that receives the refund However, because of the addition of not have any qualifying children).
in error. Taxpayers must line 10 on the 2000 Form 1040A, a
recipient of Form 1099-DIV with an
Eligible foster child
contact their financial Beginning in tax year 2000, a child is
institution to resolve the amount in box 2a may be able to file
an eligible
erroneous deposit. Form 1040A.
foster
The instructions for Form 1040A
Taxpayers will receive a paper child for
will contain a Capital Gains Tax
refund check and a notice if: the earned
Worksheet to figure the tax. The
Required information is income
worksheet is similar to the one in the
missing or incomplete. credit
1999 Form 1040 instructions.
(EIC) and
RTN does not match the Deducting student the child
master list of valid RTNs. loan interest tax credit
RTN is for a foreign bank. If you paid interest on a qualified if all the
student loan, you may be able to deduct following apply:
Power of Attorney is on file
up to $2,000 of the interest. 1. The child is your brother, sister,
and third party is autho-
stepbrother or stepsister (or a
rized to receive refund. IRA deductions
descendant of your brother, sister,
You may be able to take an IRA
Return is a decedent return. stepbrother or stepsister) or has
deduction if you were covered by a
Return is for a prior year. been placed with you by an autho-
retirement plan and your modified
rized placement agency.
$10,000 or more in with- adjusted gross income is less than the
2. You cared for that child as you
holding and zero tax is amount shown below that applies to
would your own child.
owed. you.
3. The child lived with you for the
Single, head of household, or
Math error of more than whole year, except for temporary
married filing separately and you
$50. absences.
lived apart from your spouse for all
Previously, the child only had to meet
More than two direct of 2000 $42,000
2. and 3. to be an eligible foster child.
deposits are requested for Married filing jointly or qualifying
the same account. widow(er) $62,000. Paid preparer
Mailing returns authorization
You may be mailing returns to a If a taxpayer wants to allow the IRS
different service center this year to discuss their 2000 tax return with
because the IRS has changed the filing the paid preparer who signed it, they
location for several areas. If your must check the Yes box in the signa-
clients receive an envelope with their ture area of the return.
S
PAYMENT ome taxpayers will start service delivered to taxpayers.
OPTIONS sending their returns to a When the transition is completed in the
different address beginning 2002 filing season, eight centers
Taxpayers who charge with the 2001 filing season as the Andover, Atlanta, Austin, Brookhaven,
payments made with Internal Revenue Service (IRS) Fresno, Kansas City, Memphis and
automatic extensions of reorganizes its service center opera- Philadelphia will handle only the
time to file or estimated tions to focus on specific customer receipt and processing of individual
tax payments on a credit segments. returns (Forms 1040, 1040A 1040EZ
Taxpayers and their representatives and Forms 4868 and 2888, extensions).
card should not file will continue to contact the IRS in the Cincinnati and Odgen will handle only
paper Forms 4868 or same ways they do now. (See the list the receipt and processing of business
1040-ES. of Practitioner Hotline telephone returns. Business returns include employ-
numbers by state on page 19.) Also, ment, estate and gift tax returns (Forms
taxpayers may continue to call any 706, 709, 940/940 EZ, 941/943/945,
IRS toll-free number to get their 1041, 1065, 1120 and 7004).
account information. The call will For the 2001 filing season, individuals
automatically be routed to the IRS in 12 states and businesses in 16 states
The first-ever office responsible for providing the will be affected. The following year,
government Web site to information. individual taxpayers in an additional 13
In 2001, taxpayers should send states and business taxpayers in an
provide the public with
their returns to the service center additional 18 states will be affected. At
easy, one-stop access to whose address is printed on the that point, all business filers will be
all U.S. government envelope in their tax package, listed in sending their returns to either the Ogden
resources. the instructions for each type of return or Cincinnati centers. Please refer to the
or contained in the software used to following charts for a listing of affected
prepare their electronic returns. states. Additional information is avail-
REMEMBER: In the past, the 10 service centers able on the IRS Web site at
received and processed tax and www.irs.gov/bus_info/tax_pro/
Make checks payable to information returns, managed tax- index.html.
United States Treasury payer accounts and conducted simple
not the IRS. audits through correspondence and
other enforcement actions. The IRS
assigned these activities to a specific
center based on the taxpayers
2001TAX geographic location, without regard
HINTS for the type of return.
As part of the modernization
TAX HINTS was produced with
assistance from many sources, process, these activities will be
including employees in the assigned to a center based on two
Operating and Functional factors:
Divisions, as well as the tax Whether the return is an individual
professional community. or business return. Get answers to all the
Thanks to all who contributed The taxpayers geographic loca- most frequently asked questions
and special thanks to the tion. about
Austin Service Center Com- Tax Year 2000 at
munications staff who contrib- This move allows the service
centers to build experience in their www.irs.gov/tax_edu/faq/index.html
uted to the development and
production of this document. particular customer segments and to
improve the quality of work and the
2001 TAX HINTS 8
2000 - 2001 FILING SEASONS
2001 TAX HINTS
DATE OF BIRTH
VALIDATION
Whats new for 2001
IRS simplifies tax deposit rules for small
F
or processing year 2001 business
B
(tax year 2000), the IRS eginning Jan. 1, 2001, many $6.6 billion, about 13 percent of the
will generally accept an small businesses will be allowed $52.7 billion in total employment tax
electronically filed return with to make employment tax pay- deposits.
a Self-Select PIN even though ments on a quarterly basis instead of One way small businesses will
there is not an exact match on making monthly deposits. benefit from this change is that
the date of birth (DOB). Under the new rules, the IRS will quarterly deposits greatly reduce their
However, returns e-filed allow businesses that file Forms 941 to burden of making frequent monthly
through the On-line Filing make payments every three months if deposits.
Program must still have an they have less than $2,500 in quarterly Small businesses with employment
exact DOB match, whether or employment taxes. It replaces the current taxes that are less than $2,500 per
not they include a Self-Select standard, which allows quarterly pay- quarter may pay the employment taxes
PIN. ments only if businesses have less than when they file Form 941, Employers
The DOB field on all $1,000 in quarterly employment taxes. Quarterly Federal Tax Return. Only
electronically filed returns Small businesses above the new thresh- employers with employment taxes of
using the Self-Select PIN for e- old must make payments on a monthly $2,500 or more per quarter must
file will be verified. If the DOB basis. deposit the tax with an authorized
does not match, but all other The difference between the $1,000 and financial institution. Form 943 filers
requirements are met, the $2,500 thresholds affects payment may pay with the return if the taxes
return will not be rejected. requirements for about 1 million busi- are less than $2,500 per calendar year.
An indicator on the Ac- nesses. In all, these businesses deposit
knowledgment File will identify
if the primary, secondary or New Taxpayer Rights Corner on the Web
T
both taxpayers have invalid he IRS has created a new Web Among the areas highlighted on the
dates of birth. These taxpayers section for taxpayers seeking Web page:
need to be advised to contact information about their rights Know Your Rights spells out basic
the Social Security Administra- when dealing with the nations tax taxpayer rights.
tion to have their records agency. The Taxpayer Rights Corner can The notice section gives quick links
verified and corrected as be accessed at www.irs.gov/ind_info/ to understanding IRS notices.
necessary prior to the 2002 txpyr_rights/index.html For examination and collection
filing season. The new page is designed to be an issues, the Taxpayer Rights Corner
The Acknowledgment Key easy, one-stop shop that brings a variety connects to publications detailing
record will contain the follow- of taxpayer rights issues into one step-by-step IRS processes.
ing on accepted and rejected convenient place. Previously, much of If taxpayers have a disagreement
returns. the material was located in different with the IRS, information is avail-
Date of Birth Validity Code parts of the IRS Web site. The topics able in the Appeal Rights section.
(Field 0117) values: included on the page range from basic Taxpayers with difficulty solving
0 DOB validation not required taxpayer information to detailed steps on their problems through normal IRS
1 DOB(s) valid how to get help from the IRS. You could channels can contact the Taxpayer
2 Primary DOB Invalid find it useful as a quick reference tool, or Advocate Service.
3 Spouse DOB Invalid you could refer your clients to the page The site also has information on
4 Both DOBs Invalid for detailed explanations of their rights. questions involving legal representa-
Processing for Reject Codes The Web page reflects the agencys tion and confidentiality privileges.
673 and 674 will be bypassed. continuing commitment to safeguarding
taxpayer rights.
B
eginning in the York City and Counties of Nassau, 00501-0002 Newark, NJ 07101-1187
2001 processing Rockland, Suffolk, and Westchester)
year, the IRS will
New York (all other counties), Andover, MA P.O. Box 371361
no longer accept returns in
Connecticut, Maine, Massachusetts, New 05501-0002 Pittsburgh, PA 15250-7361
the 1040PC format. Hampshire, Rhode Island, Vermont
The Form 1040PC is a
condensed, computer- Illinois, Iowa, Kansas, Minnesota, Kansas City, MO P.O. Box 970011
generated paper return Missouri, Oregon, Wisconsin 64999-0002 St. Louis, MO 63197-0011
illustrating only those
lines used by a taxpayer. District of Columbia, Indiana, Maryland, Philadelphia, PA P.O. Box 8530
This discontinuation Pennsylvania, Virginia 19255-0002 Philadelphia, PA 19162-8530
parallels the IRSs
decision to support Michigan, Ohio Cincinnati, OH P.O. Box 6223
45999-0002 Chicago, IL 60680-6223
Electronic Tax Adminis-
tration as the preferred Colorado, Idaho, Montana, New Mexico, Austin, TX P.O. Box 970016
way of doing business for Oklahoma, Texas, Wyoming 73301-0002 St. Louis, MO 63197-0016
the future, particularly
electronic filing (e-file) Arizona, California (counties of Alpine,
and payment options for Amador, Butte, Calaveras, Colusa,
individual taxpayers. The Contra Costa, Del Norte, El Dorado,
availability of IRS e-file Glenn, Humboldt, Lake, Lassen, Marin,
from a personal computer Mendocino, Modoc, Napa, Nevada, Placer, Ogden, UT P.O. Box 7704
and the addition of more Plumas, Sacramento, San Joaquin, Shasta, 84201-0002 San Francisco, CA 94120-7704
Sierra, Siskiyou, Solano, Sonoma, Sutter,
complex returns to the
Tehama, Trinity, Yolo, and Yuba), Nevada,
IRS e-file program have North Dakota, South Dakota, Utah,
further reduced the need Washington
for the Form 1040PC
format. California (all other counties), Alaska, Fresno, CA P.O. Box 60000
Taxpayers and tax Hawaii 93888-0002 Los Angeles, CA 90060-6000
preparers accustomed to
the Form 1040PC format Alabama, Arkansas, Kentucky, Louisiana, Memphis, TN P.O. Box 1214
should note that this paper Mississippi, Nebraska, North Carolina, 37501-0002 Charlotte, NC 28201-1214
filing option will not exist Tennessee
for the 2001 filing season
All APO and FPO addresses, American
and instead are encour- Samoa, nonpermanent residents of Guam
aged to consider IRS e-file or the Virgin Islands*, Puerto Rico (or if Philadelphia, PA P.O. Box 7328
the fastest, most excluding income under IRC section 933), 19255-0215 USA Philadelphia, PA 19162-7328
accurate way to file! a foreign country: U.S. citizens and those
filing Form 2555, 2555-EZ, or 4563
* Permanent residents of Guam should use: Department of Revenue and Taxation, Government of
Guam, P.O. Box 23607, GMF, GU 96921; permanent residents of the Virgin Islands should use: V.I.
Bureau of Internal Revenue, 9601 Estate Thomas, Charlotte Amalie, St. Thomas, VI 00802
T A
he Interactive Organi- s digital communication becomes tax forms, portions of the Internal
zational Directory is more and more a part of our Revenue Manual, market segment guides
a tool that gives lives, the IRS continues to come and tools for the tax professional.
taxpayers and practitioners up with new and improved ways to use Pub. 1796 can be purchased from the
the ability to obtain tele- new technology to make life easier for National Technical Information Service
phone contact information taxpayers and tax preparers. (NTIS) for $21 through the IRS Web
about the IRS executive who The Tax Professionals Corner site at www.irs.gov/cdorders or by
is best positioned to give (www.irs.gov/bus_info/tax_pro/ calling 1.877.233.6767 for $21 (plus $5
them assistance. For ex- index.html) is designed to help practitio- handling fee).
ample, to contact the SB/SE ners find what they need on the IRS Web
site. The site has fill-in-the-blank forms Order your Package X
territory manager in Mil- on-line
waukee, practitioners and as well as forms to download and print.
There is also a W-4 calculator to help Tax professionals can electronically
taxpayers can now just look update their order for Package X,
them up through the IRS taxpayers determine the number of
exemptions to take. Reference Copies of Federal Tax Forms
Web page. Information on and Instructions, at the Tax Profession-
both headquarters and field IRS Local News Net als Corner at www.irs.gov/bus_info/
contacts is now immediately The latest communications tool from tax_pro/index.html.
available through the the IRS is the Local News Net an Only current participants can use this
directory, located on the Tax offshoot of the very successful Digital method by using their account number
Professionals Corner in the Dispatch, which delivers IRS news of shown on the mailing label of Pub. 1045.
IRS Digital Daily at national importance directly to e-mail If you have an address change or are a
www.irs.gov/prod/ subscribers. The Local News Net is an new participant in the program, you
bus_info/tax_pro/iod. electronic news system designed to must submit a paper Form 3975, Tax
In the near future, this provide its subscribers with up-to-the- Professionals Annual Mailing List
directory will become a minute local news. Each IRS office, Application and Order Blank, to the
much more prominent Submission Processing, Customer nearest IRS Area Distribution Center as
feature in the IRS overall Service and Accounts Management center listed on the form. Form 3975 can be
Internet strategy. It will be has personalized its own Local News found in Publication 1045.
linked to IRS main em- Net and has its own subscription list. The
ployee, stakeholder and centers issue periodic alerts to their Electronic payment
organization databases options for individuals
E
subscribers about filing processes,
where it will give taxpayers changes in tax law and updates to phone lectronic payment options
access to real time informa- numbers, addresses, etc. direct debit (electronic with-
tion on IRS employees and All you need is Internet access and an drawal from checking or savings
contacts. The new system e-mail address to subscribe. Click on account) or credit card are conve-
will be completely auto- www.irs.gov/bus_info/tax_pro/ nient, safe and secure methods for
mated and will therefore where_list/index.html and click on the paying individual income taxes and give
adjust to changes in tele- state you want information from. taxpayers an alternative to paying taxes
phone numbers and organi- To subscribe to the Digital Dispatch by check or money order.
zation structure as it evolves. for national news, visit the IRS Web site Taxpayers may file Form 1040 series
at www.irs.gov/help/newmail/ balance due returns or Forms 4868,
maillist.html. Application for Automatic Extension of
We strongly urge you to subscribe to Time to File U.S. Individual Income Tax
both of these services. Return, electronically and simulta-
neously pay by direct debit or credit card
Tax forms on CD-ROM via tax preparation software or a tax
Publication 1796, Federal Tax Prod-
ucts CD-ROM, contains fill-in-the-blank Continued on page 14
2001 TAX HINTS 13
Practitioners Guide to Filing Season
Continued from page 14 Internet). Credit cards should not such as unauthorized charges or
paying by phone or Internet and/or be sent to the IRS with the return concerns about payment errors.
to make a payment, taxpayers can nor should credit card account Taxpayers can contact the IRS at
contact the following service numbers be written on the return. 1.800.829.1040 to report prob-
providers: The processors will forward the lems with the amount of tax owed
Official Payments Corporation appropriate tax payment informa- or any other matter concerning the
1.800.2PAY.TAX® tion to the IRS. tax return.
(1.800.272.9829) The payment date will be the date Taxpayers may also write to the
1.877.754.4413 (Customer the charge is authorized. IRS office where the return would
Service) Partial payments can be made by be mailed regarding income tax
www.officialpayments.com phone or Internet. A maximum of payment concerns. The taxpayers
PhoneCharge, Inc. two payments per tax type (or per Social Security Number, payment
1.888.ALL.TAXX quarter if making estimated tax year and payment method
(1.888.255.8299) payments) can be made by phone should be included.
1.877.851.9964 (Customer or Internet. In the event the service provider
Service) Some tax preparation software fails to forward the tax payment
www.About1888ALLTAXX.com may not allow taxpayers to make to the Treasury, the taxpayer will
Taxpayers can pay by phone or partial payments. be responsible for the tax payment
the Internet using a Discover® Taxpayers who e-file and pay and for any penalties and interest.
Card, American Express® Card should re-file rejected returns Voluntary or estimated payments,
or MasterCard®. promptly in order to ensure timely such as Form 4868 and Form
To make a payment of payment. Otherwise, the payment 1040ES payments, which result in
$100,000 or greater through the may have to be reauthorized. an overpayment will be resolved
Official Payments Corporation, through normal administrative
Cancellations,
taxpayers can call the procedures.
errors and
companys Special Services In most instances, Treasury will
questions refund an overpayment to taxpay-
Unit at 1.877.754.4420.
Generally, credit card payments ers once the return is received and
Credit card cannot be cancelled. processed. An overpayment may
convenience fees Taxpayers can call the credit card be used to settle or offset an
There is a convenience fee issuer or credit card payment existing debt on the taxpayers
charged by the service providers. service providers customer account.
Fees are based on the amount of service number to report problems
the tax payment and may vary by
service provider. e-file ensures high quality
I
The IRS does not receive or RS e-file is a way for tax that will be helpful in promoting IRS
charge any fees for payments. professionals to electronically e-file services.
Taxpayers will be informed of the file a clients tax return directly All tax professionals who become
convenience fee amount before the to IRS computers. Its the perfect providers automatically become a
payment is authorized. This fee is way to part of
in addition to any charges, such as increase the
interest, that may be assessed by business Autho-
the credit card issuer. and rized IRS
If a taxpayer provide e-file
chooses to pay additional Provider
customer Database, an on-line application that
using a credit card
service to an existing client base. allows taxpayers and tax profession-
Payments must be made electroni-
This year, the IRS will once again als to search for providers via zip
cally through tax preparation
provide all tax professionals who code. If you want to go a step further
software, a tax professional or a
become Authorized IRS e-file and electronically file federal and
credit card payment service
Providers with an IRS e-file Market-
provider (via phone or the Continued on page 16
ing Tool Kit containing materials
2001 TAX HINTS 15
Practitioners Guide to Filing Season
Electronic Continued from page 15 Also, there are now two pay-by-
state returns simultaneously, Federal/ phone credit card payment service
Federal Tax State e-file may be the perfect addition providers. Your client can also pay by
Payment to your portfolio of business services. Internet using a credit card through
System Ready to apply? See Publication these service providers.
E
3112, IRS e-file Application Package If your client is unable to pay the
FTPS is the easiest (on-line at www.irs.gov/elec_svs/efile- total tax owed by April 16, 2001, you
way for businesses to app.html) or call or e-mail your local can electronically file Form 9465,
make their federal tax IRS e-file contact for assistance. Installment Agreement Request. An
payments. EFTPS was created IRS e-file the fastest, most accu- approved installment agreement allows
by the Department of the rate way to file your taxes! your client to make a predetermined
Treasury in 1995 to modernize series of partial payments after April
tax payments moving Whats new for 2001
16, 2001. However, any unpaid tax
federal tax payments from a The new Revenue Procedure, 2000-
owed after April 16, 2001, is subject to
paper-based to an electronic 31, informs Authorized IRS e-file
penalties and interest.
system. providers of their obligations when
More than 2 million busi- participating in IRS e-file of individual What is the Self-
ness taxpayers are enrolled in income tax returns. It includes substan- Select PIN for e-file?
EFTPS. They know the real tive changes to the rules for participa- The Self-Select PIN for e-file is new
value of paying their taxes tion and the definitions of participants. for filing season 2001. It allows
electronically. If you havent Many of the rules previously prescribed taxpayers to electronically sign their e-
experienced the many benefits in Revenue Procedures 98-50 and 98-51 filed return by selecting a five-digit
of EFTPS, nows the time. have been moved to Publications 1345 Personal Identification Number (PIN).
You will find that EFTPS is: and 3112, which also have been revised. It eliminates the requirement for Form
Easy to use from any- Participants should become familiar 8453 in most cases, making e-filing
where with a phone or with the rules for participation by returns truly paperless for most
PC and modem or through reading the new Revenue Procedure and taxpayers.
a program offered by your the related IRS e-file technical publica-
Who can use the Self-
financial institution. tions.
For the 2001 filing season, there is a Select PIN for e-file?
Convenient schedule new feature, Self-Select PIN for e-file, Self-Select PIN for e-file is available
payments 24 hours a day, which is a direct product of both the for most taxpayers. The following
seven days a week. Practitioner PIN Pilot and the e-file taxpayers are eligible to use the Self-
Accurate you verify all Customer Number (ECN) pilot. The Select PIN for e-file:
the information you input to Self-Select PIN for e-file will be avail- Taxpayers who filed Form 1040,
ensure accuracy. able for most taxpayers who file elec- 1040A or 1040EZ for tax year 1999.
Fast and economical it tronically using tax preparation software Taxpayers who did not file for tax
takes less than four min- either by filing through an on-line filing year 1999, but have filed previously.
utes, and youll have no company or by filing through a tax Taxpayers who are 16 or older on or
more last-minute trips to professional. before Dec. 31, 2000, who have
the bank or to the store for never filed a tax return.
Direct Debit
stamps or envelopes. Military personnel residing overseas
The direct debit payment option has
with APO/FPO addresses.
Anyone may participate in been expanded. Your client can e-file a
Taxpayers residing in the American
EFTPS, but they must enroll return and authorize a direct debit
possessions of the Virgin Islands,
in the program. For enrollment payment for the balance due on their
Puerto Rico, American Samoa,
forms or more information, return. Whether there is a balance due or
Guam and Northern Marianas or
call 1.800.945.8400 or not, an estimated payment (Form 1040-
with foreign country addresses.
1.800.555.4477 or check the ES) can be initiated when the return is
Taxpayers filing a Form 2688
Web site: www.irs.gov/ e-filed. Your clients can also make a
(additional extension of time to file)
elec_svs/eftps.html. Enroll- payment by direct debit when Form
or Form 2350 (certain U.S. citizens
ment forms are not available 4868 is filed electronically or through
living abroad).
at IRS offices or banks. TeleFile. Continued on page 17
2001 TAX HINTS 16
Practitioners Guide to Filing Season
T
he IRS centralized telephone
DAILY organization, the Joint Opera-
tions Center, is located in
www.irs.gov Atlanta. The mission of the Joint
Operations Center is to provide toll
Download forms free telephone customers optimum
and publications. access to the resource best able to
Ask tax-related meet their needs for toll free phone
lines.
questions.
The latest technology is used to
Read summaries of monitor the status of call traffic on a
tax regulations in nationwide basis. The system provides Account Questions
plain English. both initial call routing for each 1.800.829.8815
incoming call and post-routing of calls IRS Notices or Letters
Read news based on customer topic selections. 1.800 number printed on notice or
releases. Post routing enables customers to be letter
Send your com- routed to assistors with the skills If you call the toll-free number on the
needed to answer their questions with
ments directly to notice or letter, have the latest notice
the least amount of wait time. or letter available and the Power of
the IRS on-line.
Attorney (CAF identification number)
Download statis- IRS toll-free information ready if you are calling
tics of income numbers for the taxpayer.
database. Tax Law Assistance
1.800.829.1040 Forms and Publications
Learn about 1.800.829.3676
Get assistance with tax questions, 24
electronic hours a day, seven days a week. For free copies of current and prior
services. year forms, instructions and publica-
Automated Refund Information tions. Order should arrive within 10
Use the W-4 1.800.829.4477 days.W
NE
calculator to figure Current year refund information is
withholding allow- available 24 hours a day, seven days Appeals
a week. Wait at least four weeks after 1.877.457.5055
ances.
filing a return before calling to check For help with questions when prepar-
Visit the Tax on the status of a refund to allow for ing an appeal of an IRS Collection or
W
Professionals processing. NE
Examination matter.
Corner for Taxpayer Advocate
Recorded Tax Information
practitioners. 1.877.777.4778
1.800.829.4477
Subscribe to the Hear recorded information on tax For help in resolving a problem that
Digital Dispatch subjects such as earned income hasnt been resolved by prior contacts
credit, child care credit, credit for the with the IRS.
an e-mail
newsletter or the elderly, dependents, innocent spouse Informants Line
Local News Net. relief or other topics such as elec- 1.800.829.0433
tronic filing, which form to use, or
what to do if you cant pay your taxes. Hearing Impaired Taxpayers
1.800.829.4059
For tax assistance help.
2001 TAX HINTS 18
Practitioners Guide to Filing Season
I
VALIDATION ndividual Taxpayer Identification then certified by the reviewing office
Numbers (ITINs) are used for tax and forwarded to the Philadelphia
The names and Social purposes only and do not replace IRS Campus (PIRSC) for process-
Security Numbers (SSNs) of SSNs. ITIN recipients are not eligible ing. An ITIN notice containing the
everyone claimed on a tax for the Earned Income Credit (EIC). number is generated during process-
return primary, second- ITINs are permanent tax identification ing and is mailed directly to the
ary and all dependent SSNs numbers and replace the former IRS applicant.
must exactly match the temporary numbers (ISRNs). Conse- Applicants may also mail their
names on their Social Secu- quently, the IRS no longer accepts completed Forms W-7 directly to the
rity card. In the past, the IRSNs or entries such as applied for, PIRSC with the required documenta-
IRS has not accepted elec- NRA or SSA205C on tax documents and tion. These applicants also receive
tronic returns with any returns. Because the ITIN must be their ITINs directly from the PIRSC
name/number mismatch, applied for and assigned prior to filing a through the mail.
whether for the taxpayer, the tax return, ITIN applied for in the SSN Applicants may use the services of
spouse, or a dependent. It field on a tax form is not a valid entry an Acceptance Agent who is autho-
has also reduced tax benefits either. rized to certify Forms W-7 for the
claimed on paper returns Those taxpayers eligible for ITINs IRS and review applicants docu-
when there was a name/ include resident and nonresident aliens mentation. Acceptance Agents are
number mismatch for the who are: tax practitioners and other qualify-
first spouse listed on a joint Required to file a U.S. tax return, ing agents, such as educational
return or for any dependent. Claimed as a dependent of a U.S. institutions and government agen-
This year, the IRS will do person on a tax return, cies, who file the certified Forms W-
the same for both spouses on The spouse of a U.S. citizen who files 7 on behalf of the applicants, receive
a paper filed joint return. a joint return, the assigned ITINs from the PIRSC
People who change their Claimed as a spousal exemption on a and notify their clients of the as-
surnames for any reason U.S. tax return, signed ITINs.
such as marriage should Filing a U.S. tax return solely for a Acceptable documentation is defined
get updated identification refund claim or as documentation that proves both
cards, unless they intend to Nonresidents filing a U.S. tax return identity and foreign status. When a
use the former name for to claim a treaty benefit. single document satisfies both require-
legal purposes. Form SS-5, Those not eligible for ITINs are U.S. ments (such as a passport), one proof
Application for a Social citizens and U.S. resident aliens who are will suffice; otherwise, two types of
Security Card, is available eligible to receive SSNs. documentation are required. Types of
from the SSA Web site at File a Form W-7 with the supporting acceptable documentation include:
www.ssa.gov, or by calling documentation described below to apply Passports
(toll free) 1.800.772.1213. for an ITIN. The revised Form W-7 Visas
reflects taxpayer feedback and is easier National identity cards
to understand and complete. A Spanish Drivers licenses
REMINDER version, Form W-7SP, is also available. Original documentation received by
Forms W-7 may be submitted by the PIRSC ITIN Unit is reviewed for
Refund checks will be several methods: acceptance or rejection within 14 days
returned to the IRS if the Individuals can present the completed and returned to the applicant through
address on the check is not Form W-7 and supporting documenta- the U.S. Postal Service (documents
current. Advise your clients tion at any IRS Taxpayer Assistance returned to international addresses are
to file Form 8822, Change of Center in the U.S. and abroad. An sent by registered mail). In lieu of
Address, when they move. IRS reviewer will examine the original documents, applicants may
material and return the documentation also submit quality copies of docu-
to the applicant. The Form W-7 is Continued on page 21
T
the issuing agency or notarized by a U.S. practitioners can contact the IRS
he Practitioner Identifi-
Notary. Office of Pre-Filing and Technical
cation Number (PTIN)
Note: If the documentation is in a Guidance at 1.202.874.1800.
program began in 1999
foreign language, a certified translation Forms W-7 and documentation can
to address concerns that a
must accompany it. be mailed to:
preparers SSN could be used
Applications and supporting documen- Philadelphia IRS Campus
inappropriately by clients and
tation that are rejected will be returned to ITIN Unit PO Box 447, DP 2840
others having access to a
the applicant with a detailed explanation Bensalem, PA 19020
prepared return.
for the rejection and what additional The ITIN Unit Customer Service
Preparers may download
information is needed. phone number is 215.516.4846. The
Form W-7P, Application for
More information about ITINs can be ITIN Unit fax number is:
Preparer Tax Identification
obtained from Pub. 1915, Understanding 215.516.3270.
Number, from the Tax
Your Individual Taxpayer Identification
Professionals Corner on the Note: Processing Forms W-7 and
Number.
IRS Web site at www.irs.gov issuance of the assigned ITINs may
For more information on the Accep-
or by calling the IRS tollfree take four to six weeks from receipt.
tance Agent Program and how to apply
tax forms line at
1.800.829.3676.
To ensure that the person
Adoption Identification Numbers
A
assigned to and identified by a doption Identification Numbers unable to provide an SSN when filing
specific PTIN is the person (ATINs) are for taxpayers who the return.
applying for it, the application are in the process of adopting a Note: Earned Income Credit
form asks for the preparers child and who meet the criteria for (EIC) is not allowed without a valid
name, home address, date of claiming dependent status for the adop- SSN issued by the SSA; therefore,
birth and SSN. tive child but are unable to apply for a the EIC cannot be claimed when an
The PTIN is the identifying SSN for the child, pending final adop- ATIN is used for the child. After
number of only the individual tion. adoption is final and the taxpayer
requesting it and has no Note: ATINs are issued for domestic has obtained a valid SSN for the
relation to firms employing tax adoptions only. Taxpayers involved in adoptive child, the parents may file
return preparers. Preparers international adoption must apply for an amended return to claim the EIC
may continue to use their an ITIN for the child. for the period of pending adoption,
PTINs year after year without ATINs are temporary numbers issued provided all other EIC criteria are
reapplying. Preparers must use by the IRS and are valid only for a 2- met.
either their SSN or a PTIN. year period or until the applicant receives Form W-7A is used by taxpayers to
Do not write PTIN applied for an SSN for the adoptive child. Many apply for ATINs. As with ITINs,
in the Paid Preparers Use adopting parents often have custody of applicants will be required to provide
Only section of the return. the child for a period of time pending the supporting documentation with the
(Preparers are advised to adoption and provide sufficient financial application. Applicants may file Form
consult with their respective support during the year to claim the W-7A at all IRS district offices and
states regarding the use of a dependency exemption or child care posts of duty where field personnel
PTIN on state tax returns.) credit on their returns. However, because will verify the information and pre-
Mail or fax Forms W7P to: of privacy issues, they do not have access screen the Form W-7A for accuracy
Philadelphia IRS Campus to the childs existing SSN. Additionally, and completeness.
PTIN Unit because the Social Security Administra- Applicants may also mail the Form
P.O. Box 447, DP 2840 tion (SSA) will only issue an SSN when W-7A and supporting documentation
Bensalem, PA 19020 the adoption is final, the parents are to the ITIN Unit.
The PTIN customer service
number is 215.516.4846. The
fax number is 215.516.1127.
I
FORMS IN f you file multiple Forms 4868 or and other returns related to exempt
PROPER 2688, be sure to complete Item 3, organizations.
ORDER the explanation of why the exten- Form 8736: extensions for Forms
sion is needed, for each form. Do not
I
1065 and 1066 and Form 1041,
f returns are not assembled write a single cover letter of explana- when it is used for a trust.
in attachment sequence, tion for multiple forms. Be sure to
they must be pulled apart Form 7004: extensions for Forms
write SSNs or EINs on all extensions
and reassembled. Although we and installment agreement requests. 1120 and 990T.
take care to reattach all the If you submit a Form 4868 or Form Form 2758: extensions for a
pages, important documenta- 2688 with a copy to be date stamped variety of excise tax, income tax,
tion could get lost in the and returned, include a preaddressed information returns and other
process. envelope to expedite the process. returns, including Form 1041 when
Form 9465, Installment There are four extension forms for it is filed for an estate.
Agreement Request, and Form Be sure to check one of the boxes
returns other than the 1040 series, and
911, Application for Taxpayer
they are not interchangeable. Be sure near the top of the form to indicate the
Assistance Order to Relieve
to use the correct one. type of return for which you are
Hardship, should be attached
Form 8868: extensions for various requesting an extension. Blanket
to the front of the return.
types of Forms 990 and 990-T extensions are not granted. Separate
Attach other forms and
exempt organization returns, Form forms must be filed for each return.
schedules at the end of the
return in order of the Attach- 1041-A and Form 5277 (if required
ment Sequence Number that is to be filed by the trustee of a trust)
shown below the year in the
upper right corner of the form Extensions and Installment Agreements
T
or schedule. Attachment axpayers who file extensions by to request a monthly payment plan
Sequence Numbers are not in April 16 but are unable to pay specifying the monthly payments.
the same order as form num- the full amount will not be There is a processing fee of $43 for
bers. For example, Form 8801 penalized if they pay 90 percent of the entering into an installment agreement
has Attachment Sequence No. total tax due at the time they request and $24 for restructuring or reinstating
74 and Form 8814 has Attach- the extension. Regulations require that an installment agreement. Do not send
ment Sequence No. 40. the tax liability reported on Form the $43 when you send the Install-
IRS forms and schedules 4868, Application for Automatic ment Agreement Request. We will
without attachment sequence Extension of Time to File U.S. Indi- send you a notice for the fee once the
numbers follow next in vidual Income Tax Return, be properly agreement has been approved. Form
numerical order. Attach
estimated based on available informa- 9465 can be transmitted electronically
separate statements at the end
tion. The extension may be disallowed by itself or accompanying an electroni-
of the return not between
and a late filing penalty assessed if the cally filed return.
forms and schedules that are
in sequence. If these relate to
taxpayer does not properly estimate the Attach Form 9465 to the front of the
previous correspondence, refer tax due and attach it to the request. return so it can be detached and
to the IRS customer service Form 4868 is in voucher form again processed separately. Attach Forms W-
representative by name, ID this year and can be sent electronically. 2, W2- G and 1099R separately so
number and mail stop number, Balance due Forms 4868 should be they will not be inadvertently detached
where possible. Copies of sent to the appropriate lockbox. (See with the Form 9465. If you have
approved extensions of time to pages 38 and 39.) already filed the return or are filing this
file should be attached If a client cannot pay the taxes owed form in response to a notice, File Form
following the IRS forms. at the time of filing of the return, you 9465 by itself with the IRS service
Continued on page 24 can file a Form 9465, Installment center where you filed your income tax
Agreement Request, with the tax return.
return. This form allows the taxpayer
2001 TAX HINTS 23
Practitioners Guide to Filing Season
C
PACKAGE ongress has redefined eligible Security card says Not Valid for
foster child for purposes of the Employment, however, the taxpayer
Continued from page 23 cannot claim the EIC if the number was
earned income credit (EIC)
(Ignore the sequence number and the child tax credit (CTC). The issued so that the taxpayer could receive
on Form 2688.) Attach the new definition appears in section 412 of a federally funded benefit, such as
remittance to the front of the the Ticket to Work and Work Incentives Medicaid. If the taxpayer has a card
return on top of Form W-2. Improvement Act of 1999. For tax years with this legend and the taxpayer's
Secure the return package after 1999, a child is an eligible foster immigration status has changed so that
with one staple in the top child if all the following apply: the taxpayer is now a U.S. citizen or
left corner. Use binder clips 1. The child is the taxpayer's brother, permanent resident, the taxpayer should
or large rubber bands for sister, stepbrother, stepsister (or a request that the SSA issue him or her a
large documents. Do not use descendant of the taxpayer's brother, new Social Security card without the
tape. sister, stepbrother or stepsister), or a legend. Individual Taxpayer Identifica-
Keep the upper right portion child placed with the taxpayer by an tion Numbers (ITINs) issued by the IRS
of the front page blank and authorized placement agency. An to aliens who cannot get an SSN cannot
free of staples. The Docu- authorized placement agency is an be used to claim the EIC.
ment Locator Number agency of a state, political subdivi- To claim the EIC, the taxpayer must
(DLN) is printed in that sion or tax-exempt child placement meet the following requirements:
area. A staple can cause the agency licensed by the state. The taxpayer's filing status cannot be
DLN to be printed illegibly 2. The taxpayer cared for the child as Married Filing Separately.
and can even damage the the taxpayer would care for his or her The taxpayer must be a U.S. citizen
imprinting equipment. Some own child. or resident alien. An exception exists
practitioners stamp or print 3. The child lived with the taxpayer for for a nonresident alien who (1) is
a message such as IRS the entire year, except for temporary married to a U.S. citizen or resident
File Copy in that area in absences. (A child who was born or alien, and (2) chooses to be treated as
large letters which obscure died during the year is considered to a resident for the entire year by filing
the DLN. have lived with the taxpayer for the a joint return.
entire year, if the child lived with the The taxpayer cannot file Form 2555
Do not use binders or
taxpayer for the entire time the child or Form 2555-EZ, relating to foreign
plastic covers; these must
was alive during the year.) earned income.
be removed for processing
Before tax year 2000, the child had to The taxpayer's investment income
and are discarded.
meet only the second and third require- must be $2,400 or less.
Do not staple the envelope. ments above to be the taxpayer's eligible The taxpayer (and spouse, if filing a
foster child. joint return) cannot be the qualifying
Note: The IRS has free eligible foster child of another person.
child posters for you to display in your Requirements for a qualifying child.
EITC ON office. They are available in English To be a qualifying child, a child must
(Pub. 3709) and in Spanish (Pub. meet three the following three tests:
THE WEB 3709SP) from the IRS forms distribu- Age
Go directly to Earned tion centers. To order, call toll free Residency
Income Tax Credit 1.800.829.3676. Relationship
Some things have not You can find specific details for these
information on the
three tests in Publication 596, Earned
Digital Daily: changed
Income Credit; the instructions for
www.irs.gov/eitc Rules for all taxpayers
Forms 1040 and 1040A; and the
To claim the EIC, the taxpayer (and
Schedule EIC instructions.
spouse, if filing a joint return) must
have a valid Social Security Number Continued on page 25
F
FORMS 2848 orm 2848, Power of Attorney and should receive the refund check.
Declaration of Representation, is If you submit a Form 2848
Andover Centers the only form required to appoint For a return, submit the form to the
310 Lowell St. Stop 321 a representative. It can be used by center where the return was filed.
Andover, MA 01810 enrolled or unenrolled preparers and
fax: 978.474.9701 In response to a notice, submit the
certain others. form to the center with collection
Atlanta Centers Form 8821, Tax Information Authori- responsibility.
PO Box 47-421 Stop 98 zation (TIA), allows taxpayers to
Doraville, GA 30362 For excise tax issues, submit the form
authorize individuals, corporations,
fax: 678.530.6392 to the Cincinnati Submission Process-
firms, organizations or partnerships to
ing Center.
Austin Centers inspect or receive confidential informa-
PO Box 1231 Stop 6737 tion. Unlike Form 2848, it does not give For employee plan issues, submit the
Austin, TX 73301 permission to act on behalf of the form to the Memphis Submission
fax: 512.460.0176 taxpayer. Processing Center.
You may mail or fax the forms to the For exempt organization issues, fax
Brookhaven Centers
appropriate center. Faxed Forms 2848 the form to the Ogden Center.
1040 Waverly Ave. Stop 534
Holtsville, NY 11742 and 8821 will be added to the centers Form 2848 common errors
fax: 631.654.6583 Centralized Authorization File (CAF) Joint Returns
within 48 hours of receipt. All others Both taxpayers did not sign and date
Fresno Centers will be processed within five calendar
PO Box 12067 Stop 65103 the Form 2848.
days. During the peak season, process-
Fresno, CA 93776
ing may take up to 21 calendar days. Didnt indicate taxpayers ex-spouse
fax: 559.454.6334 status from a joint return.
Special request: If you fax a Form
Kansas City Centers 2848, please dont mail a hard copy. Business Returns
PO Box 24551 Stop 6800 Dont send a POA for each client as a Didnt indicate the title of authorizing
Annex 1 standard operating procedure send signature. (Box 9)
Kansas City, MO 64131 one only when it is really needed. Any Return
fax: 816.823.7863
Form 2848 requirements Both representative and taxpayer
Philadelphia Centers Taxpayers name, address, TIN and have not signed and dated Form
CAF Unit DP 6211 phone number. 2848, parts I and II. (Box 9)
11601 Roosevelt Blvd.
Representatives name and address. Didnt include correct name, address
Philadelphia, PA 19154
fax: 215.516.5994 Type of taxes. and SSN or EIN.
Federal tax form numbers and years Didnt specify tax years, tax periods
Excise Tax
requested. Continued on page 30
Cincinnati Centers
CAF Unit Stop 530 Declaration of representative.
Cincinnati, OH 45999 When calling the toll-free number
fax: 606.292.5185
Representatives signature, date and on notices (available 7 days a week,
designation. 24 hours a day):
Employee Plans
Memphis Centers Taxpayers signature and date. (Both Have POA (CAF identification
CAF/FTD Unit, Stop 5324 taxpayers signatures if married filing number) information ready.
5333 Getwell Road jointly.)
Have all IRS-related documents
Memphis, TN 38118 Did you know? ready, especially the latest
fax: 901.546.4115 If a taxpayer wants the representative notice.
Exempt Organizations to receive a refund check on their behalf,
For quicker service, call on
Ogden Centers they must specifically authorize the
Wednesday, Thursday or Friday
PO Box 9941 Stop 6737 representative to receive the refund by
between 7:30 a.m. and 7:30 p.m.
Ogden, UT 84409 initialing Box 6. Reminder: Be sure to
fax: 801.620.4249/4250/4251 list the name of the representative who
2001 TAX HINTS 29
Practitioners Guide to Filing Season
A
various tax topics.
refund check will be returned has been cashed. If the original check
TTY/TDD equipment:
to the IRS if the address on the has not been cashed, a replacement
If you have access to
check is not the most current. check will be issued. If the check has
TTY/TDD equipment,
The refund will not be reissued until the been cashed, a photocopy of the
call 1.800.829.4059 to
center is notified of the new address. check will be mailed to the taxpayer
ask tax questions or to
Complete and return Form 8822, with a claim Form 1133. The com-
order forms and publica-
Change of Address, to notify the IRS. If pleted form should be returned to
tions.
a refund check is lost or stolen, a FMS at the address provided. The
completed Form 3911, Taxpayer State- investigation of lost or stolen refund
ment Regarding Refund, or a detailed checks that have been cashed is a
REMEMBER: letter must be sent to the Center. time-consuming process. Taxpayers
Treasury Department Reminders: can expect a delay of three months to
Circular No. 230 contains Allow for the normal processing time a year before another check is issued.
the rules governing the before you inquire about refunds: Refund checks that are not cashed
practice of attorneys, Paper 6 weeks within one year of the issuance date
CPAs, enrolled agents, e-file/TeleFile 3 weeks are automatically cancelled.
enrolled actuaries, apprais- 1040X 8-12 weeks Refund checks will not be split
ers and other persons Business Returns 6 weeks because of a family dispute, even
representing taxpayers
If a check was issued for a joint though a divorce decree or other civil
before the IRS. It autho-
return, both signatures must be action may so direct.
rizes the Director of
present on the Form 3911. Overpayments will offset federal tax
Practice to grant or deny
enrollment and to institute The IRS and Financial Management debts and nontax debts such as child
disciplinary proceedings. Service (FMS) determine if the check support before the refund is issued.
I
Andover ts a copy of tax return information that can be used for a loan, scholarship or
310 Lowell Street Stop 679 other financial aid. A tax return transcript is a quick way to verify your tax
Andover, MA 01810 information from the IRS a line-by-line printout of the information on the
fax: 978.474.9405 original tax return.
fax: 978.474.5982 Its fast, easy and free
fax: 978.474.5986 Dial 1.800.829.1040. If you reach a customer service representative, tell them
Atlanta you wish to order a transcript of your tax return.
4800 Buford Hwy. Stop 91
If you reach an automated voice message, you will hear a menu of options. Listen
Doraville, GA 30362
for the option that says . . . for questions about your personal tax records . . .
fax: 678.530.5326
Press the number for that option.
fax: 678.530.5327
Austin Continue to follow the voice prompts until you are asked to enter your Social
3651 S. IH-35 Stop 6716 Security Number. (If you filed a joint return, enter the first SSN that you entered
Austin, TX 78741 on the return.)
fax: 512.460.2272 You will hear a voice prompt . . . to request a transcript of your tax return . . .
fax: 512.460.2354 Press the number for that option.
Brookhaven Your transcript should arrive by mail within 10 to 15 days.
1040 Waverly Ave. Stop 532
Holtsville, NY 11742 Paper request for a transcript
fax: 631.654.6325 Complete IRS Form 4506 (Rev. 5-97), Request for Copy or Transcript of Tax
fax: 631.447.4405 Form. Form 4506 is available from the IRS Web site at www.irs.gov/ or by calling
Cincinnati 1.800.829.3676. The taxpayers signature is required. For even faster service, fax
PO Box 145500 Stop 2801A your request. (See addresses and fax numbers at left.) Remember, there are no
Cincinnati, OH 45250 charges for tax return transcripts.
fax: 859.292.3592
How to request copies of tax returns
R
Fresno
5045 E. Butler Stop 28105 equests for photocopies of tax To request tax account information,
Fresno, CA 93888 returns may not be submitted via do not submit Form 4506. Instead,
fax: 559.443.7822 fax. Full payment of $23.00 per write or visit the nearest IRS office.
fax: 559.443.7823 return along with the completed, signed Tax account information shows any
Kansas City and dated Form 4506 should be mailed to later changes that you or the IRS
2306 E. Bannister Rd. the center where the return was filed. made to the original return.
Stop 6700 Annex 1 Allow 30 to 60 days for delivery. Requests for copies of tax returns
Kansas City, MO 64131 Other important will not be processed without the
fax: 816.823.7667 information appropriate payment attached.
Memphis Allow at least 10 weeks processing time Remember: The Freedom of Informa-
PO Box 30309 Stop 5318 after the original return is filed before tion Act and Privacy Act do not
Memphis, TN 38130 requesting a copy or other information. provide any greater access to
fax: 901.546.4175 confidential tax information than is
Allow at least 30 days for a delivery
Ogden when requesting prior year returns. otherwise available under the
PO Box 9941 Stop 6734 Internal Revenue Code. Copies of
Odgen, UT 84409 Form W-2 information is available nine
returns, as filed, can be requested
fax: 801.334.4178 months after the end of the tax year, and
by submitting a completed Form
requests take six to eight weeks to
Philadelphia 4506 and are available under the
process.
11601 Roosevelt Blvd. DP 536 IR Code Section 6103(c) and (e).
Philadelphia, PA 19255 Form 1099 information cannot be
fax: 215.516.1311 requested with Form 4506 and should
be obtained from the payer if possible.
2001 TAX HINTS 31
Practitioners Guide to Filing Season
D
provides information, assistance issuing federal closing letters.
elays in processing
and technical support to represen- Provide complete descriptions of
returns filed for
tatives of estates and practitioners. Their assets and include CUSIP numbers
deceased taxpayers
work includes problem resolution on for publicly traded stocks and bonds.
can be reduced or eliminated
issues involved in processing, tax Provide the number of shares and
by writing the decedents
compliance, penalty abatements, exami- par value for stock and/or face value
name, the word deceased and
nation, closing letters, and determination and interest rate for bonds.
the date of death in the top left
of tax and interest due by estates electing
margin of page 1, Form 1040. When reporting closely held business
installment payment of estate tax under
Also include a completed interests, family partnerships or
Internal Revenue Code (IRC) Section
Form 1310 if required. See fractional interest in property,
6166.
Publication 559, Tax Informa- provide detailed schedules to show
tion for Survivors, Executors how returned values were determined
and Administrators, for
Estate and Gift Stock
and provide current appraisals, if
additional information. Valuation:
available.
Including all of the required This compliance project reviews estate
and gift returns reporting ownership of If claiming the state death tax credit
information will eliminate on Form 706, provide verification of
delays caused by correspond- large dollar values in publicly traded
stocks and bonds. Values of these the payment of tax. The IRS charges
ing for missing or incomplete nonrefundable federal interest on the
information. securities are verified using third-party
software. A correspon- credit amount
dence examination from the due
process handles If claiming the state death date until the
deficiencies attributed tax credit on Form 706, balance is
paid. Federal
to any undervaluation. provide verification of the
TOP credit interest
payment of tax. is not paid on
1040 Deferred
Payment of refunds of tax
ERRORS based solely on the state credit.
Estate Tax Under IRC
Section 6166: When filing Forms 709 for both
Taxpayer identification husband and wife where consent or
numbers or names for The Taxpayer Relief Act of 1997
changed the four percent rate on the first gift splitting is involved, include a
dependents didnt match copy of the donor spouses return
IRS or SSA records. We $1 million (less exemption equivalent) to
two percent. The interest on the balance with the other return so annual
didnt allow the exemp- exclusions for donees can be veri-
tions. of deferred tax is at a rate which is 45
percent of the interest rate on tax defi- fied. Not including a copy may cause
Child tax credit was long delays in processing.
figured or entered incor- ciencies. The change is in effect for
rectly. estates of decedents who die after When filing Form 709, include the
Refund amount or the December 31, 1997. basis amount under Schedule A, Part
amount owed was figured 1, or else indicate zero. This
incorrectly. Helpful Hints when information is required on the form,
Tax amount wasnt the preparing Forms 706 and if not provided may cause long
correct amount from the (Estate) and 709 (Gift) delays. The basis established by the
tax table for the taxable returns: donors allows the donees to reduce
income. When preparing Form 706, verify that the sale of the property by the basis.
Earned Income Credit the SSN is correct. When two dece-
was figured or entered dents returns are filed using the same
incorrectly. number, long delays in processing
Underreporter Program
analyzes unreported income
T
he Underreporter Program The CP-2000 is a proposal to payment, we will mail the Statutory
analyzes and processes change the income, deductions, tax Notice of Deficiency. If taxpayers
returns with potential credits or payments reported on the disagree with the notice, they have
underreported income. The returns return. It is not a demand for pay- 90 days to petition the U.S. Tax
are identified in the Information ment. The Court. Whether
Returns Program (IRP). After all taxpayer is or not they
current year tax returns are pro- asked to petition the court,
cessed, they are computer matched to respond we will still
the corresponding IRP documents within 30 consider any
(Forms W-2, W-2P, 1099, 1098, days from information the
etc.). For example, a W-2 for wages the date of taxpayer submits
is compared to the wages reported on the notice. to resolve the
the return, and a 1099-INT for Many disagreement.
interest is compared to the interest cases are If there is no
reported on the return. closed response, or the
When amounts reported on the agreed certified statutory
return do not match amounts on IRP with a notice is un-
documents, an information return signed claimed at the
listing is sent to an automated consent statement and/or full pay- post office, the tax, interest and
database showing all income that the ment. There are also partially agreed penalties are assessed by default
taxpayer reported to the IRS for the cases, where the taxpayer agrees to after the 90-day deadline is past. A
year in question. The database also some of the income inquired about balance due notice is then sent to
includes a history of the accounting and satisfactorily explains the the taxpayer. The case goes to
which is updated weekly. remaining issue(s). collection if no payment is received.
In screening, a tax examiner Many cases are closed with no Even though the case is now in
performs an in-depth analysis of the change to the tax liability because collection status, the taxpayer can
case. The examiner determines if all the taxpayer provided sufficient still disagree with the assessment
income in question can be identified documentation that the income is not and send correcting statements,
satisfactorily on the tax return. If it taxable or the underreported amount letters from banks, etc., for consid-
can be found, the case is closed and is not sufficient to change the tax. eration to have the tax, penalties or
the taxpayer is never contacted. If the If, in the course of verifying interest reduced or abated. This
income cannot be located anywhere income, the examiner finds that the program is also worked in the
on the return or cannot be readily taxpayer made an error on the return Underreporter area.
identified, we send the taxpayer a which calls for a refund, the IRS will We dont recommend that
CP-2501 or CP-2000 depending on issue one. taxpayers file an amended return as
the issues involved. If the original notice comes back a response to the statutory notice;
The CP-2501 asks the taxpayer to undelivered or we have not received however, if the taxpayer files a
explain where on the return the a response from the taxpayer, we Form 1040X, it will be considered
income is reported. This notice has no issue a 90-day Statutory Notice of when the case is processed. Tax-
figures or proposed balance due Deficiency. Before generating payers are requested on the notice
amounts. If the discrepancy can be statutory notices, we check for not to file an amended return,
explained or supporting documenta- payments and new addresses. because a Form 1040X can delay
tion is enclosed, the case is closed. Notices are sent to the most current processing. We can take all neces-
The taxpayer is informed that all is address on file with the IRS. If full sary actions with the taxpayers
resolved. If there is no response or payment is found, we can close the response.
the information from the taxpayer is case at that time. If there is no
not sufficient, a CP-2000 is issued. indication of a response or full
Statute of Limitations
T
he Internal Revenue Code of prepaid credits (federal tax was filed, the claim is allowable
states that the IRS will assess withheld, timely estimated tax when filed within two years from the
tax, allow overpayments and payments, earned income tax credit, date the tax was paid.
collect taxes within a specific time etc.) within three years of the Return The RRA 98, Section 3202,
period, known as the Statute of Due Date (RDD), plus extensions, allows for the suspension of the
Limitations. When the Statute of including the time of extension statute on filing overpayment claims
Limitations expires for a tax return, granted by a Presidentially Declared during periods of disability. Section
the IRS can no longer allow the Disaster. To be timely, a claim for 3202 suspends the running of the
taxpayer's claim for overpayment or refund/credit must be filed within statute of limitations on refunds
assess additional tax for that return. three years of the original return. during the time the taxpayer is
Normally, the Assessment Statute While the claim may be timely for medically, physically, or emotionally
Expiration Date (ASED) is three the decrease in tax, the refund/credit unable to handle their financial
years from the tax period due date, may be limited. Prepaid credits may affairs. The disability must be
or three years from the received date not be refunded or offset unless medically determinable and must
of the original return, whichever is claimed within three years of the due continually last for not less than 12
later. The Statute will not expire date or extended due date of the months or result in the death of the
until the taxpayer files a return and return. If the original return was filed taxpayer. It does not suspend the
three years have elapsed. Tax Forms late and the claim is being filed statute of limitations for taxpayers
941, 942 and 943 are exceptions. within three years of the original, the that have a spouse or other guardian
The ASEDs for these tax returns are amount of refund/credit may be to act for them during the periods of
three years from April 15 of the year limited to the amount of tax paid disability. Section 3202 does not
following their due date, or from the within the three years immediately apply to any claim for refund or
received date, whichever is later. preceding the filing of the claim, plus credit that is barred as of the date of
Generally, the Refund Statute any extensions of time for filing. If enactment, July 22, 1998.
Expiration Date (RSED) expires the original return was filed timely The Collection Statute Expiration
within three years from the original and the claim is being filed more Date (CSED) is ten years from the
due date of the tax return or two than three years after the original, date of assessment of tax. If no
years from the date the tax was paid, the amount of refund/credit is limited return is filed for a tax period, the
whichever was later. Exception: The to the amount of the tax paid within CSED cannot be computed and will
IRS must receive an original delin- the two years immediately preceding not expire.
quent return, claiming a refund/credit the filing of the claim. If no return
T
he IRS now has an automated sent the refund hold letter not to a
program freezing refunds of local office. There is no need to send
IRS more than $300 when a tax- another current year return; doing so
INTEGRITY payer account indicates an open tax may only complicate the process. The
HOTLINE delinquency inquiry within the last earliest the taxpayer could expect a
five years. current year refund is one full month
The IRS expects its The IRS sends letters to taxpayers after the delinquent return is pro-
employees to conform requesting they file the delinquent cessed. However, if the delinquent
return or explain why no return should return shows a balance due, the held
to the highest stan-
be filed. If we dont receive a re- refund will be applied.
dards of integrity. If sponse, we prepare a substitute for Practitioners should provide the
you have reason to return on the missing periods. These taxpayers daytime phone number and
believe that an IRS cases involve refunds due to taxpayers the best hours to call. If there is a
employee is engaging in who file only when they expect a problem with the return, it can be
misconduct, call: refund. resolved more quickly by calling the
1.800.752.7001 To avoid delays, delinquent returns phone number listed on the notice
should be mailed to the office that rather than by correspondence.
ext. 968
2001 TAX HINTS 36
Practitioners Guide to Filing Season
T
information if you use a
money order. ax practitioners should mail all your Form 1040-V remittance returns to
types of Form 1040 returns with the lockbox address. If your clients
a remittance to the lockbox. receive a preprinted Form 1040-V
There are procedures in Package X for package, encourage them to use the
preparation and mailing of the 1040-V preprinted Form 1040-V with their
with lockbox mailing instructions and remittance returns. The preprinted
addresses. These procedures not only voucher can be read through high-speed
provide for expanding lockbox volumes computer scanning equipment, eliminat-
but also provide consistent procedures ing the need for data entry, thus ensur-
for tax preparers. Installment agree- ing fast and accurate posting of the
ment payments and fees should also be payment information.
mailed to the appropriate lockbox Forms 4868, Extension Requests,
address. Not all individual tax packages with remittances are processed at the
contain lockbox mailing instructions. lockbox. (See the list of lockbox
Individual tax packages are limited addresses on the next two pages.)
The fastest, easiest in scope regarding which taxpayers will
receive the lockbox two-label envelope.
and most accurate Other taxpayers will receive the usual
way to file! address envelope. Regardless of the
package received by your clients, mail
TAX
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