I am thrilled with my clients. I have a lot of fun and interesting and dynamic and sweet clients. What I am not so thrilled with is the annoying and completely incomprehensible notices that come in and that we are forced to deal with.
The problem with a notice from the IRS is that two emotions are vying for prominence in my clients’ heads:
- Either they think, as one told me – “I knew the return was right and so I wasn’t going to bother you with the notice.”
- Or, the more common – “There is something wrong with my return and you messed up and now I owe tax.”
Let’s dissect what a couple of these notices are that are so annoying and such a nuisance to deal with.
Form 1310 – Statement of person claiming a refund due a deceased taxpayer
First, I have been receiving several notices from the IRS on deceased clients requesting a signed copy of Form 1310. This form is required when there is a refund due and the person is deceased. That is all fine and dandy – except the form was already signed by the representative and included with the return when it was sent in. So, now we are forced to get another signed copy.
The notice then goes on to request proof of death? Really? In all these instances, the taxpayers had been receiving Social Security, which has not only stopped, but there have been instances when portions have been repaid. So, doesn’t someone already know the client is deceased? Is there really a concern that we are claiming deceased taxpayers that are not truly deceased?
The final annoyance is that then the notice goes on to say that maybe for future returns, we should consider electronically filing the return. There are two issues with that:
- The taxpayer is deceased. That generally means that they do not need to file a tax return any more. Just saying.
- You cannot electronically file a tax return with a Form 1310. Because it needs a separate signature. Which we state as the reason on the Form 8948, Preparer Explanation for Not Filing Electronically. Which, you guessed it, was also included with the paper filed tax return.
QCD – Qualified charitable distribution
A second example is clients receiving notices because they had a QCD on their tax return. This is when a portion of the required minimum distribution (RMD) from their IRA is sent directly to a qualifying charity of their choice.
The issue comes about because the taxpayer still receives a 1099-R for the full amount of the RMD. However, per the instructions on the Form 1040 for Line 15a, QCD prints next to the taxable amount on line 15b. This is the hint to the IRS that the RMD was taken, but was contributed directly to a charity.
So, the IRS is now trying to tax the client on the full amount of the RMD – even though the return was correctly prepared. Just another nuisance letter to write explaining why the additional tax is not due.
All these responses have started being sent in. But that is not the end of it. We are waiting on the IRS to get back to us. Agreeing with us. That the returns that were already filed are correct. Which we already knew.
And that is why some days are more of a nuisance than they need to be.
Donna H. Laubscher, CPA