For tax professionals, the week after the end of tax season is a time of reflection. We try to analyze what went wrong during the season and celebrate what went right. To some extent, this was a particularly trying season. It’s easy to blame things on the federal government but this time, it really was the federal government’s fault, Congress in particular. When they passed the American Taxpayer Relief Act of 2012 on January 5, 2013, it contained over two hundred provisions that affected the 2012 tax year. I took my first income tax class in 1978 and started preparing returns in January, 1979. In those days, we prepared returns by hand so when Congress did make late changes, the Internal Revenue Service simply made changes to the instructions and told tax preparers to use, for example, line 21 of the Form 1040 or line 17 of the Schedule A or line 6 of the Schedule C, etc. etc. Well, today, hardly anyone does returns by hand and the IRS certainly doesn’t process all that many returns by hand either. We all use software. Our software has to seamlessly be integrated with the IRS’ software or, how shall we say it nicely, all hell breaks loose. I have to believe from the amount and frequency of software updates we received all tax season, this year was a software programmer’s nightmare. As late as 9pm on April 15, we encountered a glitch in the filing system. It did get straightened out before midnight but that was cutting it a bit close. In fact, that’s ridiculous. I don’t think it’s too much to ask Congress to stop making these late, late changes. They have all year; why wait until January 5 of the next year? Shame on them.
Another situation that we encounter year round is one of clients not being able to locate copies of prior year tax returns. While it’s true that we live in the age of technology, taxpayers still have many reasons to have a paper copy of their tax return in their possession. Many people are taking advantage of the continued low interest rate environment to refinance property, perhaps for the second, third or fourth time. The bank or finance company wants to look at a tax return as well as the W2s and attachments. Today, they really do need to verify income in order to write a deal. Many people are buying real estate because of the favorable pricing that is available. Prices are picking up but there are still many good deals out there. Many of those financing arrangements will require a copy of the buyer’s tax return in order to complete the paperwork. Tax professionals also need to look at previous years returns, especially when encountering a new client as there may be useful carryover information on the prior year return that affects the current year return. Items such as capital loss carryover, charitable contribution carryover, taxable state refund, and depreciation on purchases for business returns can only be determined by inspecting the previous year’s return. What’s a person to do if they can’t locate that prior year return? It depends upon who prepared the previous return.
If a tax preparation firm prepared the return, we recommend the person make a call and simply ask for a replacement copy. Since all firms do provide a copy of the return to the client originally, some firms do charge a nominal fee for a replacement copy. When dealing with a professional firm, the key is that a copy is available. It’s just a matter of cost. If the person prepared his own return, however, and has mis-placed the copy, the only other source that has a copy is the Internal Revenue Service. If the taxpayer requires a full copy of the return, including all forms and attachments and W2s, the cost to get that complete copy will be $57 per year. Form 4506 is the vehicle for asking the IRS to send a copy. It can be obtained through the IRS’ website: www.irs.gov. Once obtained, it must be completed and mailed to the IRS in Fresno, CA along with a check for $57. The exact address is: RAIVS Team, Stop 37106, Fresno, CA 93888. They do suggest it could take up to 60 days to process the request. The current year, as well as the preceding six years, is generally available. If the taxpayer only needs a transcript of the return, which is a line by line detail of the tax return, the taxpayer uses Form 4506-T or 4506-EZ to make that request. The advantage of asking for a transcript is two-fold. First, there is no cost for a transcript. Second, it only takes five-ten business days to get a transcript from the IRS as compared to the 60 days for a complete copy. The 4506-T or EZ can be faxed to the IRS at 1-800-908-9946. The disadvantage of the transcript is that it doesn’t give a copy of the whole return; it only gives the line-by-line information on the return. For many taxpayers, that is sufficient. For others, they will need to spend the $57. This is Jerry Coon signing off.
Jerry Coon is an Enrolled Agent
and a Registered Tax Return Preparer.
He owns Action Tax Service
on Northland Dr in Rockford.
Contact Jerry though his website