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2001TAX

HINTS Practitioner’s Guide to the Filing Season

WELCOME A message from the Commissioner


TO TAX of Internal Revenue
HINTS
L
ooking back over the past three electronically
years, we have made significant without any

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, we’re 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 we’re 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 • We’re 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 taxpayer’s signature. With a few accomplishments, we can’t be satisfied.
you and your clients. exceptions, the 2001 filing season The real work has just begun, and I’m
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/
Practitioner’s Guide to Filing Season

INSIDE What the modernized


THIS IRS means to you
ISSUE
T
he IRS is undergoing the most more effectively using limited
significant reorganization in its resources. The cornerstone of this
The New IRS.........................2 history, and the agency is effort was the establishment of three
especially grateful for the support it strategic goals. These goals are:
What’s New for 2000.............7 has received from the practitioner • Service to each taxpayer.
Electronic Services...............13 community since the beginning of the • Service to all taxpayers.
modernization effort. • Increased productivity through a
e-file......................................15 Practitioners are a critical part of quality work environment.
Telephone organization.........18 the tax system and are essential in In order to implement these goals,
providing the IRS with insights and the IRS has adopted five guiding
Identification Numbers.........20 input throughout the modernization principles. These principles are to:
process. Practitioners are also major • Understand and solve problems
Fax-TIN................................22
communicators of the modernization from the taxpayer’s point of view.
Extensions............................23 program not only to their clients, but to • Enable managers to be account-
all taxpayers. The IRS values its able.
Earned Income Credit..........24
relationships with tax professionals • Align measures of performance at
Taxpayer Advocate Service..26 and will work to enhance these rela- all organizational levels.
tionships in the future. • Foster open, honest communica-
Power of Attorney................29 The current IRS structure estab- tion.
Refunds.................................30 lished in 1952 succeeded in accom- • Insist on total integrity.
plishing its purpose of administering
Tax Return Transcripts........31 Finally, the spirit of this effort is
the nations tax laws. Today, the IRS
embodied by the new IRS mission
Estate & Gift Tax..................32 collects about $1.8 trillion in federal
statement: “Provide America’s
taxes and has a voluntary compliance
Underreporter...........................33 taxpayers top quality service by
rate of approximately 98 percent.
helping them understand and meet
Statute of Limitations...........34 However, despite consistently fulfilling
their tax responsibilities and by
its purpose, the IRS has been the
Estimated Taxes....................34 applying the tax law with integrity
subject of a great deal of study and
and fairness to all.”
criticism in recent years. These studies
Penalty Abatement................35 One of the Service’s main objec-
revealed a wide range of problems
tives is to assist stakeholders and
Reasonable Cause.................37 including inadequate technology, poor
improve the overall consistency and
service to taxpayers, violations of
Lockbox Addresses...............37 quality of stakeholder interactions.
taxpayer rights, lack of adequate
Over the last few months, the IRS
training and resources and the inappro-
The IRS priate use of enforcement statistics.
Beginning with the IRS Restructur-
has evaluated current relationships
with external stakeholders across the
country and has designated specific
Mission ing and Reform Act of 1998, and
culminating with the stand-up of four
points of contact within the agency
Provide America’s taxpayers that will be responsible for reaching
new operating divisions last year, the
top quality service by helping out to them and maintaining open
them understand and meet
IRS has designed and implemented
lines of communication during the
their tax responsibilities and by changes that are intended to better
upcoming filing season. These points
applying the tax law with serve taxpayers. The central tenet of
integrity and fairness to all. of contact will include employees
modernization lies in the belief that by
from all four operating divisions, as
understanding the taxpayer’s point of
IRS
Internal Revenue Service
view, the Service will be in a better
position to collect the appropriate
well as the commissioner’s represen-
tatives in all 50 states, and will
amount of tax while at the same time Continued on page 3

2001 TAX HINTS 2


Practitioner’s Guide to Filing Season

CONTACTING THE What the modernized IRS means to you


NEW IRS Continued from page 2
actively seek to develop preferred basis. Eventually, it will include
IRS Leadership Team
relationships, meet stakeholder needs numbers for customer service and
View our organizational structure
and provide stakeholders access to the taxpayer education and communica-
and find out whom to contact to
IRS. The goal for the future is not only tion staff for each operating division,
learn more about each IRS
to maintain existing relationships but to as well as contact information for
organization. (www.irs.gov/
build on them and ensure that they executives on the local, regional and
bus_info/tax_pro/iod/1/
continue to grow. national levels.
index.html)
This new strategy is called Relation- The agency’s new mission re-
The IRS in your state ship Management, and it takes customer quired a fundamental change in its
See how the different services service to the next level. It is a type of structure. In the new IRS, taxpayers
offered by the IRS are distributed account management that emphasizes a will interact with four operating
across your state and learn whom proactive approach whereby IRS divisions (ODs) that will focus on
to contact to meet your business relationship managers reach out to the specific needs of its customers.
needs. (www.irs.gov/bus_info/ customers and get to know business The ODs are: Wage and Investment
tax_pro/iod/2/index.html) needs and industry characteristics. A (W&I), Small Business/Self-Em-
Small Business and major part of the strategy is to provide ployed (SB/SE), Large and Mid-Size
Self-Employed stakeholders with points of entry into the Business (LMSB) and Tax Exempt/
Contact points for taxpayers IRS — people they can call when they Government Entities (TE/GE).
filing Forms 1120S (S-corpora- need assistance. The practitioner hotline Additional components of the new
tions); 1065 (partnerships), 1120 (See page 19.) will remain in place, but structure are the four functional
(small corporations); 2106 efforts are underway to vastly improve divisions (FDs). The FDs will be
(business expenses); Schedule C access to all parts of the Service. responsible for handling issues
(self-employed); Schedule E Toward this end, the Service has devel- agencywide and will provide support
(rental real estate and royalties); oped what promises to be one of the and service to the ODs. The four
Schedule F (farmers), estate and most useful communications tools functional divisions are Appeals,
gift tax, fiduciary returns or available to our stakeholders — an Communications and Liaison,
international tax returns. interactive telephone directory of IRS Criminal Investigation and the
(www.irs.gov/bus_info/tax_pro/ managers and executives that is acces- Taxpayer Advocate Service. For
iod/5/index.html) sible on our Web site. This directory detailed information about the ODs,
provides the names and numbers of key please see the At-a-Glance fact
Large & Mid-Sized IRS points-of-entry on a state-by-state sheets on the following pages.
Business
Contact points for taxpayers IRS offers Daily Tax Tips

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 year’s 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 can’t 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

2001 TAX HINTS 3


Practitioner’s Guide to Filing Season

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 O’Malley 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.

2001 TAX HINTS 4


Practitioner’s Guide to Filing Season

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 4–60 routine transac-
all. Chuck Peterson tions with the IRS per year
Strategic Priorities: Director, Strategy Program The SB/SE Operating Divi-
• Meet the public’s 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

2001 TAX HINTS 5


Practitioner’s Guide to Filing Season

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.

2001 TAX HINTS 6


Practitioner’s Guide to Filing Season

DIRECT What’s new for 2001


DEPOSIT OF Capital Gains tax package, please use it. Otherwise,
REFUNDS distributions — see Where Do You File? on the back

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.

2001 TAX HINTS 7


Practitioner’s Guide to Filing Season

CREDIT Service center transition


CARD changes filing locations

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 taxpayer’s
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 taxpayer’s 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

SERVICE CENTER FILING LOCATIONS BY STATE


940/940EZ, 941/943/945
1040, 1040A, 1040EZ 706/709 1041, 1065, 1120, 7004
STATE OF TAXPAYER 2000 2001 2000 2001 2000 2001
Alabama Memphis Memphis Memphis Memphis Memphis Memphis
Alaska Ogden Fresno Ogden Ogden Ogden Ogden

Practitioner’s Guide to Filing Season


Arizona Ogden Ogden Ogden Ogden Ogden Ogden
Arkansas Memphis Memphis Memphis Cincinnati Memphis Ogden
California (except Sac) Fresno Fresno Fresno Fresno Fresno Fresno
California (only Sac) Ogden Ogden Ogden Ogden Ogden Ogden
Colorado Ogden Austin Ogden Ogden Ogden Ogden
Connecticut Andover Andover Andover Andover Andover Andover
Delaware Philadelphia Brookhaven Philadelphia Cincinnati Philadelphia Cincinnati
Florida Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta
Georgia Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta
Hawaii Fresno Fresno Fresno Cincinnati Fresno Ogden
Idaho Ogden Austin Ogden Ogden Ogden Ogden
Illinois Kansas City Kansas City Kansas City Kansas City Kansas City Kansas City
Indiana Cincinnati Philadelphia Cincinnati Cincinnati Cincinnati Cincinnati
Iowa Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden
Kansas Austin Kansas City Austin Austin Austin Austin
Kentucky Cincinnati Memphis Cincinnati Cincinnati Cincinnati Cincinnati
Louisiana Memphis Memphis Memphis Cincinnati Memphis Ogden
Maine Andover Andover Andover Andover Andover Andover
Maryland Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati
Massachusetts Andover Andover Andover Andover Andover Andover
Michigan Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati
Minnesota Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden
Mississippi Memphis Memphis Memphis Cincinnati Memphis Ogden
Missouri Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden
Montana Ogden Austin Ogden Ogden Ogden Ogden
9
2000 - 2001 FILING SEASONS
2001 TAX HINTS

SERVICE CENTER FILING LOCATIONS BY STATE


940/940EZ, 941/943/945
1040, 1040A, 1040EZ 706/709 1041, 1065, 1120, 7004
STATE OF TAXPAYER 2000 2001 2000 2001 2000 2001
Nebraska Ogden Memphis Ogden Ogden Ogden Ogden
Nevada Ogden Ogden Ogden Ogden Ogden Ogden

Practitioner’s Guide to Filing Season


New Hampshire Andover Andover Andover Andover Andover Andover
New Jersey Brookhaven Brookhaven Brookhaven Cincinnati Brookhaven Cincinnati
New Mexico Austin Austin Austin Austin Austin Austin
New York (Albany, Buffalo) Andover Andover Andover Andover Andover Andover
New York (Brklyn, Manh) Brookhaven Brookhaven Brookhaven Brookhaven Brookhaven Brookhaven
North Carolina Memphis Memphis Memphis Cincinnati Memphis Cincinnati
North Dakota Ogden Ogden Ogden Ogden Ogden Ogden
Ohio Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati
Oklahoma Austin Austin Austin Austin Austin Austin
Oregon Ogden Kansas City Ogden Ogden Ogden Ogden
Pennsylvania Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati
Rhode Island Andover Andover Andover Andover Andover Andover
South Carolina Atlanta Atlanta Atlanta Cincinnati Atlanta Cincinnati
South Dakota Ogden Ogden Ogden Ogden Ogden Ogden
Tennessee Memphis Memphis Memphis Memphis Memphis Memphis
Texas Austin Austin Austin Cincinnati Austin Ogden
Utah Ogden Ogden Ogden Ogden Ogden Ogden
Vermont Andover Andover Andover Andover Andover Andover
Virginia Philadelphia Philadelphia Philadelphia Philadelphia Philadelphia Philadelphia
Washington Ogden Ogden Ogden Ogden Ogden Ogden
Washington, DC Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati
West Virginia Cincinnati Atlanta Cincinnati Cincinnati Cincinnati Cincinnati
Wisconsin Kansas City Kansas City Kansas City Cincinnati Kansas City Cincinnati
Wyoming Ogden Austin Ogden Ogden Ogden Ogden
10
Practitioner’s Guide to Filing Season

DATE OF BIRTH
VALIDATION
What’s 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, Employer’s
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 nation’s 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 agency’s tion and confidentiality privileges.
673 and 674 will be bypassed. continuing commitment to safeguarding
taxpayer rights.

2001 TAX HINTS 11


Practitioner’s Guide to Filing Season

For practitioner-prepared returns: Where to file


The IRS will
no longer
2000 Forms 1040, 1040A and 1040EZ only
accept paper If your client lives in: Without payment With payment
returns in the Florida, Georgia, South Carolina, Atlanta, GA P.O. Box 105093
1040PC West Virginia 39901-0002 Atlanta, GA 30348-5093
format
Delaware, New Jersey, New York (New Holtsville, NY P.O. Box 1187

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 IRS’s
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

2001 TAX HINTS 12


Practitioner’s Guide to Filing Season

ON-LINE IRS electronic


DIRECTORY information services

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 Professional’s 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 it’s 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
Practitioner’s Guide to Filing Season

Continued from page 13 If a taxpayer making inquiries.


professional. A taxpayer also may e- chooses to pay • Taxpayers will be notified if a
file a tax return and pay by credit using direct debit payment is returned by the
card via phone or the Internet • The taxpayer authorizes the U.S. financial institution due to insuffi-
through a service provider. Department of the Treasury cient funds, incorrect account
Taxpayers may e-file their Form (through a Treasury Financial information, closed accounts, etc.
1040 and Form 1040-ES, Estimated Agent) to transfer money from If this occurs, the IRS will send a
Tax for Individuals, and simulta- their bank account to the Treasury notification letter to the address on
neously pay by direct debit via tax account. the tax return explaining why the
preparation software or a tax • Funds are automatically with- payment could not be processed.
professional. They may also make a drawn on the payment date The letter will include instructions
Form 1040-ES payment by credit selected. However, if a weekend for sending a check to a unique
card via phone or the Internet or bank holiday is designated, the address that has been established
through a service provider. payment will not be withdrawn for this initiative.
Making a payment electronically until the next business day. • In the event the financial institu-
eliminates the need to send in the • Direct debit payments will be tion is unable to process the
paper Form 1040-V, Form 4868 or withdrawn in a single transaction, transaction, the taxpayer will be
Form 1040-ES. Payments must be at not installments. responsible for the tax payment
least $1. Payments for prior tax and for any penalties and interest.
years are not accepted at this time. Cancellations, errors • Contact the IRS immediately at
and questions 1.800.829.1040 if there is an error
When can • Taxpayers can call the Treasury in the amount withdrawn.
electronic payments Financial Agent at • In the event Treasury causes an
be made? 1.888.353.4537 toll free to cancel incorrect amount of funds to be
• Form 1040 series — including a payment or to report problems withdrawn from the bank account,
Forms 1040A, 1040EZ, 1040 and such as bank closures, lost or Treasury is responsible for
TeleFile users — payment options stolen bank account numbers, returning any improperly trans-
begin Jan. 12, 2001 and end Oct. closed bank accounts or unautho- ferred funds.
15, 2001. rized transactions.
• Form 4868 payment options, • Once the IRS e-file return is How to make a
except TeleFile, begin Jan. 12, accepted, the scheduled payment credit card payment
2001 and end April 16, 2001. date cannot be changed. If the • The e-file and credit card option is
• The TeleFile direct debit payment date needs to be changed, the only available through a number of tax
option begins April 1, 2001 and option is to cancel the payment preparation software packages
ends April 16, 2001. Form 4868 transaction and choose another and through tax professionals. For
payments made through TeleFile payment method (credit card, more information about e-filing
will be effective on April 16, check or money order). and paying all at once (including
2001. • Scheduled payments can be convenience fees and accepted
• Form 1040-ES direct debit cancelled up to 8:00 p.m. Eastern credit cards), taxpayers can refer
payment option begins January Time two business days before the to tax preparation software or a
12, 2001. Taxpayers can choose scheduled payment date. tax professional.
one of the following payment • The cancellation must be autho- • Pay-by-phone and Internet options
effective dates: April 16, June 15 rized by the taxpayer or by a are available through credit card
or Sept. 17, 2001. The credit card person with access to the payment service providers.
payment option begins March 1, taxpayer's Social Security Num- • When paying by phone, a re-
2001 and ends Jan. 23, 2002. ber, payment amount and bank corded script will guide taxpayers
• Payments can be made 24 hours a account number. through the call.
day, seven days a week. • Taxpayers can also call the above • When paying by Internet, taxpay-
number to inquire about payments ers will be prompted to fill in the
through Oct. 17, 2001. Taxpayers necessary entry fields.
should wait at least five days after • For more information about
the e-file return is accepted before Continued on page 15

2001 TAX HINTS 14


Practitioner’s 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 taxpayer’s
• 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
company’s 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 taxpayer’s
charged by the service providers. service provider’s 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 client’s tax return directly All tax professionals who become
convenience fee amount before the to IRS computers. It’s 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
Practitioner’s 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 What’s 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 haven’t 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, now’s 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 you’ll 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
Practitioner’s Guide to Filing Season

Continued from page 16 products to taxpayers entitled to indi-


APPLYING TO
Returns for the following taxpayers vidual income tax refunds. The agree-
PARTICIPATE ments cover not only the firm that
are not eligible for using the Self-Select
IN E-FILE PIN for e-file: signed the agreement but also related
• Decedents. providers and financial institutions that
• Submit Form 8633, • Legal or illegal aliens with Social do electronic filing business with the
Application to Participate Security Numbers not valid for firm. For example, if a transmitter
in the Electronic Filing employment. signed an agreement, all Electronic
Program. Return Originators (EROs) who use that
Your clients must furnish the follow-
• Apply early. It takes up to transmitter are covered by the agree-
ing information to secure their PIN:
60 days to process appli- ment. Providers that did not present
• The Adjusted Gross Income and
cations, which are ac- proposals to the original RFA or are not
Total Tax from their 1999 return
cepted only from Aug. 1 covered under one of the announced
(prior to any adjustments).
through Dec. 1. agreements may still apply to obtain the
• If your client did not file a return for
• Forms 8633 are processed DI for the upcoming filing season under
tax year 1999, enter zero “0” as the
at the Andover Submission an amendment to the RFA.
amount for Adjusted Gross Income
Processing Center. For In return for the DI, covered Autho-
and Total Tax.
more information about e- rized IRS e-file Providers and financial
file or the name and phone
If your client is institutions agreed to screen returns and
number of the e-file unable to return to return information available to them in
coordinator in your area, your office to input the normal course of their business for
call 1.800.691.1894. their Self-Select PIN potential fraud and abuse and report
Your client may authorize you to their findings to the IRS.
For the latest information on Other Authorized IRS e-file Providers
e-file, check out The Digital input their Self-Selected PIN by
completing an IRS e-file Signature and financial institutions that do elec-
Daily at www.irs.gov/ tronic filing business with any of the
elec_svs/elf-txpro.html. Authorization. Provide the Signature
Authorization to the taxpayer along announced firms may already qualify to
with a copy of the completed tax return, obtain the DI for their taxpayers even if
FORMS 8453/ they did not submit a proposal. The
either personally or by mail. Instruct
8453OL your client to review the tax return for announced firm’s agreement will cover
accuracy and complete the Signature them as long as they commit to the
It is no longer necessary terms of the agreement. Contact the firm
Authorization by providing the re-
to submit Forms W-2 for more information.
quested information (a self-selected
and 1099R with Forms A Memorandum of Agreement that
five-digit PIN, pen and ink signature
8453/8453OL, but Forms and date). If your client is unable to results from the original RFA or the
8453/8453OL must be return the signed document to your application process is covered by
submitted unless the office, they may return it by mail or Section 18 of Revenue Procedure 98-50
taxpayer qualifies to use fax. It is not necessary for both taxpay- (IRS e-file) or Section 15 of Revenue
the Self-Select PIN. ers e-filing a joint return to select this Procedure 98-51 (On-Line Filing).
option.
NOTE: Important Contact your local
If you are an e-filer, announcement about e-file coordinator
your software should the Debt Indicator Find out how to contact your
include an electronic The IRS has negotiated agreements
to provide a Debt Indicator (DI) in the
local e-file coordinator at
version of Form 8867 or www.irs.gov/elec_svs/eta-
2001 filing season to Authorized IRS e-
facsimile. file Providers in response to proposals coord.html
You may keep informa- submitted under the Request for Agree-
tion that is required to ments (RFA) process. The DI is impor-
be kept for three years tant to Authorized IRS e-file Providers
in electronic files. and financial institutions that offer bank
2001 TAX HINTS 17
Practitioner’s Guide to Filing Season

THE IRS centralized telephone


DIGITAL organization

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
Professional’s 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 hasn’t 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 can’t pay your taxes. Hearing Impaired Taxpayers
1.800.829.4059
For tax assistance help.
2001 TAX HINTS 18
Practitioner’s Guide to Filing Season

2001 Filing Season Practitioner Hotline Numbers

State Phone Hours State Phone Hours


Number Local Time Number Local Time
Alabama 205.912.5150 8:30 a.m.-4:30 p.m. Nebraska 314.342.9325 8:00 a.m.-4:30 p.m.
Alaska 206.220.5786 8:00 a.m.-5:30 p.m. Nevada 602.207.8828 8:00 a.m.-4:30 p.m.
Arizona 602.207.8828 8:00 a.m.-4:30 p.m. New Hampshire 617.720.4147 8:00 a.m.-4:30 p.m.
Arkansas 405.297.4141 8:00 a.m.-4:30 p.m. New Jersey 973.921.4052 8:00 a.m.-4:30 p.m.
California 949.389.4618 8:00 a.m.-4:30 p.m. New Mexico 602.207.8828 8:00 a.m.-4:30 p.m.
510.444.4906 8:00 a.m.-5:30 p.m. New York 518.427.4228 8:00 a.m.-4:30 p.m.
510.444.4972 8:00 a.m.-5:30 p.m. 631.447.4960 8:00 a.m.-3:00 p.m.
510.271.0781 8:00 a.m.-5:30 p.m. 718.488.2250 8:00 a.m.-4:30 p.m.
213.576.4532 8:00 a.m.-4:15 p.m. 716.961.5151 8:15 a.m.-4:15 p.m.
559.452.4210 8:00 a.m.-3:30 p.m. 212.719.8281 9:30 a.m.-4:30 p.m.
Colorado 303.820.3940 8:00 a.m.-4:30 p.m. North Carolina 336.378.2157 8:00 a.m.-4:30 p.m.
Connecticut 860.756.4476 8:00 a.m.-4:30 p.m. North Dakota 314.342.9325 8:00 a.m.-4:30 p.m.
DC 410.727.7965 7:30 a.m.-4:30 p.m. Ohio 513.263.3349 8:00 a.m.-4:30 p.m.
Delaware 302.573.6421 7:30 a.m.-4:30 p.m. 216.623.1338 8:30 a.m.-4:30 p.m.
Florida 954.423.7763 8:00 a.m.-4:15 p.m. Oklahoma 405.297.4141 8:00 a.m.-4:30 p.m.
904.399.5531 8:15 a.m.-4:00 p.m. Oregon 503.222.7562 7:30 a.m.-5:30 p.m.
305.982.5242 8:00 a.m.-4:15 p.m.
Pennsylvania 412.281.0281 7:00 a.m.-4:30 p.m.
678.530.7799 8:00 a.m.-4:00 p.m.
206.220.5786 8:00 a.m.-5:30 p.m. Rhode Island 401.525.4113 8:00 a.m.-4:30 p.m.
Idaho 303.820.3940 8:00 a.m.-4:30 p.m. South Carolina 803.253.3231 7:30 a.m.-4:15 p.m.
Illinois 312.435.1110 8:00 a.m.-4:30 p.m. South Dakota 314.342.9325 8:00 a.m.-4:30 p.m.
Indiana 317.377.0027 8:00 a.m.-5:00 p.m. Tennessee 615.781.4826 8:00 a.m.-4:45 p.m.
901.546.4213 8:00 a.m.-4:30 p.m.
Iowa 314.342.9325 8:00 a.m.-4:30 p.m.
Texas 214.767.1501 7:00 a.m.-10:00 p.m.
Kansas 314.342.9325 8:00 a.m.-4:30 p.m.
281.721.7640 7:00 a.m.-10:00 p.m.
Kentucky 502.582.5284 8:00 a.m.-5:00 p.m. 512.464.3337 7:00 a.m.-10:00 p.m.
Louisiana 504.558.3050 8:00 a.m.-4:30 p.m. Utah 303.820.3940 8:00 a.m.-4:30 p.m.
Maine 617.720.4147 8:00 a.m.-4:30 p.m. 801.620.6339 8:00 a.m.-4:30 p.m.
Maryland 410.727.7965 7:30 a.m.-4:30 p.m. Vermont 617.720.4147 8:00 a.m.-4:30 p.m.
Massachusetts 617.720.4147 8:00 a.m.-4:30 p.m. Virginia 804.698.5010 8:30 a.m.-4:30 p.m.
Michigan 313.628.3870 8:00 a.m.-4:30 p.m. Washington 206.220.5786 8:00 a.m.-5:30 p.m.
Minnesota 314.342.9325 8:00 a.m.-4:30 p.m. West Virginia 804.698.5010 8:00 a.m.-5:30 p.m.
Mississippi 601.292.4944 8:00 a.m.-4:30 p.m. Wisconsin 314.342.9325 8:00 a.m.-4:30 p.m.
Missouri 314.342.9325 8:00 a.m.-4:30 p.m. Wyoming 303.820.3940 8:00 a.m.-4:30 p.m.
Montana 303.820.3940 8:00 a.m.-4:30 p.m.

2001 TAX HINTS 19


Practitioner’s Guide to Filing Season

SECONDARY Individual Taxpayer


SSN Identification Numbers (ITIN)

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

2001 TAX HINTS 20


Practitioner’s Guide to Filing Season

Individual Taxpayer Identification Numbers


PTIN Continued from page 20
PROGRAM ments that have either been certified by for Acceptance Agent status, tax

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:
preparer’s 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
Professional’s 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 toll–free 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 preparer’s 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 Preparer’s 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 W–7P to: of privacy issues, they do not have access screen the Form W-7A for accuracy
Philadelphia IRS Campus to the child’s 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.

2001 TAX HINTS 21


Practitioner’s Guide to Filing Season

FAX-TIN Fax-TIN: EINs by fax


T
AND axpayers can request Employer president or other principal officer.
Identification Numbers (EINs) • Partnership – a partner.
TELE-TIN by fax through the Fax-TIN
NUMBERS Program. They should first complete a • Estate or trust – administrator,
Form SS-4 and then fax it to the executor, fiduciary or trustee.
Andover • Other unincorporated organizations –
appropriate center. (See fax numbers
Tele-TIN: 978.474.9717 a responsible and duly authorized
at left.) The fax
Fax-TIN: 978.474.9774 member or officer of the
number is avail-
able 24 hours a organization.
Atlanta day. Under Remember,
Tele-TIN: 770.455.2360 most a third party
Fax-TIN: 678.530.6156 circum- must have
stances, proper
Austin the IRS written
Tele-TIN: 512.460.7843 will authorization
Fax-TIN: 512.460.8000 assign an such as a Form 2848,
EIN within Power of Attorney and
Brookhaven four work- Declaration of Representative, before
Tele-TIN: 631.447.4955 days. Be sure newly assigned EINs can be released to
Fax-TIN: 631.447.4991 to provide us with your fax number so them. (See page 29 for Form 2848
we can fax the EIN. information.)
Cincinnati Fax-TIN is the safest, easiest and The guidelines for sole proprietorship
Tele-TIN: 859.292.5467 most accurate method of obtaining an EINs are now more stringent. These
Fax-TIN: 859.292.5760 EIN, but in an emergency you may EINs are issued primarily to individuals
also request an EIN by phone. Our who have employees (or file any other
Fresno resources allow us to have a limited federal returns or documents); individu-
Tele-TIN: 559.452.4010 number of people available to answer als who issue Forms 1099 for contract
Fax-TIN: 559.443.6961 the phone, so we can better serve you labor; or those who are required to have
if you fax us the EIN request. an EIN by the Bureau of Alcohol,
If you must telephone us, complete Firearms and Tobacco.
Kansas City
Form SS-4 and then call us any
Tele-TIN: 816.823.7777
weekday between the hours of 7:30 COMMON FAX-TIN
Fax-TIN: 816.823.7776
a.m. and 5:00 p.m. (See phone num- PROBLEMS
bers at left.) The EIN will be assigned
Memphis immediately, but you must still mail • Taxpayer faxes Form SS-4 and
Fax-TIN only: 901.546.3916 the completed Form SS-4 to us within then calls Tele-TIN to request an
24 hours. (Be sure the Form SS-4 is EIN. This could cause duplicate
Ogden completely filled out and signed by a EINs to be issued.
Fax-TIN only: 801.620.7115 duly authorized person. Keep a copy • Form SS-4 is not completely
Problems: 801.620.6339 for your records.) filled out.
EIN disclosure laws • Taxpayer is uncertain about the
Philadelphia The Fax-TIN/Tele-TIN function is type of entity being established.
Tele-TIN: 215.516.6999 limited by strict disclosure laws, and
Fax-TIN: 215.516.3990 • Callers sometimes are unable to
an EIN can be given out to a duly
establish that they are authorized
authorized person only. A duly
to request an EIN for the entity
authorized person for the following
they represent. An EIN can be
types of organization is:
released only to duly authorized
• Sole proprietorship – owner.
individuals.
• Corporation – president, vice-
2001 TAX HINTS 22
Practitioner’s Guide to Filing Season

ASSEMBLE Avoid extension problems

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
Practitioner’s Guide to Filing Season

PROPER Earned Income Credit


ASSEMBLY New definition of (SSN) issued by the Social Security
OF RETURN eligible foster child Administration (SSA). If the Social

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

2001 TAX HINTS 24


Practitioner’s Guide to Filing Season

Earned Income Credit


Continued from page 24
In addition, the child must have a mathematical or clerical error, the checklist in Notice 97-65 or the new
valid Social Security Number. (See taxpayer may need to file Form Form 8867, Paid Preparer's Earned
the first paragraph under rules for 8862, Information To Claim Earned Income Credit Checklist. For 1999
all taxpayers above.) Income Credit After Disallowance, and subsequent years, preparers are
Basic rules for persons with a with his or her 2000 tax return. required to use Form 8867, not the
qualifying child: Form 8862 must be attached to the checklist in Notice 97-65.
• The taxpayer's earned income and first return on which the taxpayer Due diligence requirements
modified adjusted gross income claims the EIC filed (either on paper To satisfy the due diligence require-
(AGI) must both be less than or electronically) after the EIC was ments, you must:
$27,413 if the taxpayer has one disallowed or reduced for the earlier • Complete Form 8867 (or your
qualifying child, and $31,152 if year. If the taxpayer claims the EIC own checklist, which may be
the taxpayer has more than one and a required Form 8862 is not electronic, as long as it provides
qualifying child. For 2000, the attached, the EIC will be disallowed the same information as Form
maximum credit is $2,353 if the under the mathematical and clerical 8867).
taxpayer has one qualifying child, error procedures. • Complete the appropriate EIC
and $3,888 if the taxpayer has If, in addition to a denial or worksheet in the Form 1040,
more than one qualifying child. reduction of the taxpayer's EIC, it 1040A or 1040EZ instructions or
• The taxpayer's qualifying child was determined that the taxpayer's in Pub. 596 (or your own
cannot be the qualifying child of EIC claim was due to reckless or worksheet, which may be elec-
another person with a higher intentional disregard of the EIC tronic, as long as it provides the
modified AGI. rules, the taxpayer would have been same information as the appropri-
notified that he or she is ineligible to ate worksheet). The worksheets in
Basic rules for persons without a
claim the EIC for the following 2 the instructions and the publica-
qualifying child:
years (for a fraudulent claim, the tion vary. For example, either of
• The taxpayer's earned income and
period is 10 years). (See chapter 5 of the worksheets in Pub. 596 can be
modified adjusted gross income
Publication 596 for details.) used by taxpayers filing Form
(AGI) must both be less than
$10,380. The maximum credit for And last but not 1040A, but the worksheet in the
2000 is $353. least, Due Diligence instructions for Form 1040A
• The taxpayer (or spouse, if filing On Oct. 17, 2000, the IRS issued cannot be used by taxpayers
a joint return) must be at least age TD 8905, which contains final required to use Pub. 596.
25, but under age 65 at the end of regulations pertaining to due dili- • Have no knowledge that any of the
the year. gence requirements for paid information used to determine the
• The taxpayer (and spouse, if filing preparers of EIC returns. The final taxpayer's eligibility for, or the
a joint return) cannot be eligible to regulations adopt the proposed amount of, the EIC is incorrect.
be claimed as a dependent on regulations, TD 8798, which were • Keep the following information,
anyone else's return. issued on Dec. 21, 1998, along with either on paper or electronically,
• The taxpayer (and spouse, if filing temporary regulations. for 3 years after the June 30th
a joint return) must have lived in EIC due diligence has applied to following the date you gave the
the United States more than half all returns prepared by paid return to the taxpayer for his or
of the year. Members of the preparers beginning with the 1997 her signature:
military on extended active duty tax year. For 1997, temporary rules • Form 8867 (or your own check-
outside the United States are appeared in Notice 97-65. As one of list),
considered to live in the United the four due diligence requirements, • The EIC worksheet (or your own
States during that duty period. preparers were required to complete worksheet), and
a checklist attached to Notice 97-65. • A record of how, when and from
Disallowance of the EIC
For 1998, preparers were required to whom you obtained the informa-
If the IRS disallowed or reduced
follow the rules in the temporary tion used to prepare the checklist.
the taxpayer's EIC for a year after
1996 for any reason other than a regulations and to complete either the

2001 TAX HINTS 25


Practitioner’s Guide to Filing Season

Taxpayer Advocate Service


T
he Taxpayer Advocate Service ing fees for professional represen- • Send a written request for
is an IRS program that tation); assistance (if Form 911 is not
provides an independent • Will suffer irreparable injury or available), or
system to assure that tax problems long-term adverse impact; • Request that an IRS employee
that have not been resolved through complete a Form 911 on your
• Have experienced a delay of more
normal channels are promptly and behalf (in person or over the
than 30 days to resolve the issue;
fairly handled. The program is phone).
or
headed by the national taxpayer
• Have not received a response or You may fax a Form 911 (or
advocate. Each state and service
resolution by the date promised. written request) to your local
center has at least one local taxpayer
taxpayer advocate. Form 911 is
advocate, who is independent of the Additionally, you may contact the
available by calling the IRS forms-
local IRS office and reports directly taxpayer advocate if all established
only number, 1.800.829.3676 or at
to the national taxpayer advocate. systems or procedures have failed to
the IRS Web page: www.irs.gov.
The goals of the Taxpayer Advo- operate as intended to resolve the
An Application for a Taxpayer
cate Service are to protect individual problem or dispute.
Assistance Order requires the
taxpayer rights and to reduce tax- Hardship situations and other
advocate to determine if significant
payer burden. The taxpayer advocate issues that are referred to the tax-
hardship exists and to review the
independently represents your payer advocate are reviewed on the
case to determine what action
interests and concerns within the IRS. individual merits of each case.
should be taken to relieve the
This is accomplished in two ways: The Taxpayer Advocate Service is
hardship. In certain situations,
• Ensuring that taxpayer problems not a substitute for established IRS
enforcement action may be sus-
that have not been resolved procedures or the formal Appeals
pended while a case is being
through normal channels are process. The advocate cannot reverse
reviewed.
promptly and fairly handled. legal or technical tax determinations.
The majority of cases are
• Identifying issues that increase How do I reach a resolved administratively by the
burden or create problems for Taxpayer Advocate? taxpayer advocate. Even when
taxpayers: bringing those issues to • Call the telephone number listed hardship is not a factor, the advo-
the attention of IRS management for the office closest to you or the cate is often able to help resolve the
and making legislative proposals office with which you have been taxpayer’s problem.
where necessary. dealing. (See next page.) What can I expect
Who may use the • Call the Taxpayer Advocate’s toll- from the Taxpayer
Taxpayer Advocate free telephone number: Advocate?
Program? 1.877.777.4778 The taxpayer advocate will listen
If you have a an ongoing issue with • Call the general IRS toll-free to your point of view and will work
the IRS that has not been resolved number (1.800.829.1040) and ask with you to address your concerns.
through normal processes, or you for Taxpayer Advocate assistance. You can expect the advocate to
have suffered, or are about to suffer, • Write the office nearest you or the provide you with:
a significant hardship as a result of one you have been dealing with. • A fresh look at your problem,
the application of the tax laws, (See next page for addresses.) • Timely acknowledgment,
contact the taxpayer advocate.
• TTY/TTD help is available by • The name and phone number of
Generally, the taxpayer advocate
calling: 1.800.829.4059. the individual assigned to your
can help if, as a result of the applica-
• Check the Taxpayer Advocate Web case,
tion of the tax laws, you:
• Are suffering, or are about to site at www.irs.gov/ind_info/ • Updates on progress,
suffer, a significant hardship; advocate.html • Time frames for action,
or
• Are facing an immediate threat of • Speedy resolution, and
adverse action; • File Form 911, Application for a
• Courteous service.
Taxpayer Assistance Order,
• Will incur significant cost (includ-
2001 TAX HINTS 26
Practitioner’s Guide to Filing Season

Taxpayer Advocate Contacts


Do you want assistance from a taxpayer advocate? This handling when you can’t get a problem solved through
assistance is not a substitute for established IRS proce- normal channels. Call toll free 1.877.777.4778 or call
dures, formal Appeals processes, etc., but the taxpayer the taxpayer advocate office nearest you listed below.
advocate can give your tax matter proper and prompt
MINNESOTA
ALABAMA CONNECTICUT INDIANA St. Paul Office
Birmingham Office Hartford Office Indianapolis Office 316 North Robert St. S
801 Tom Martin Dr. 135 High St. 575 N. Pennsylvania St. Stop 1005-STP
Room 150-PR Stop 219 Stop TA 770 St. Paul, MN 55101
Birmingham, AL 35211 Hartford, CT 06103 Indianapolis, IN 46204 651.312.7872
205.912.5631 860.756.4555 317.226.6332
MISSISSIPPI
ALASKA DELAWARE IOWA Jackson Office
Anchorage Office Wilmington Office Des Moines Office 100 W. Capitol St., Stop JK31
949 East 36th Ave. 409 Silverside Rd. 210 Walnut St. Jackson, MS 39269
Stop A-405 Wilmington, DE 19809 Stop 1005 601.292.4800
Anchorage, AK 99508 302.791.4502 Des Moines, IA 50309
907.271.6877 515.284.4780 MISSOURI
DISTRICT OF COLUMBIA St. Louis Office
ARIZONA Baltimore Office KANSAS Robert A. Young Building
Phoenix Office 31 Hopkins Plaza Wichita Office 1222 Spruce Street
210 E. Earll Drive Baltimore, MD 21201 271 W. 3rd St., North Stop 1005-STL
Stop 1005-PX 410.962.2082 Stop 1005-WIC St. Louis, MO 63103
Phoenix, AZ 85012 Wichita, KS 67202 314.612.4610
602.207.8240 FLORIDA 316.352.7506
Ft. Lauderdale Office MONTANA
ARKANSAS 7850 SW 6th Court KENTUCKY Helena Office
Little Rock Office Plantation, FL 33324 Louisville Office Federal Building
700 West Capitol St. 954.423.7677 600 Dr. MLK Jr. Place 301 S. Park, Stop 1005-HEL
Stop 1005-LIT Jacksonville Office Federal Building-Room 622 Helena, MT 59626.0023
Little Rock, AR 72201 400 West Bay St., STE 35045 Louisville, KY 40202 406.441.1044
501.324.6269 Stop TAS 502.582.6030
NEBRASKA
CALIFORNIA Jacksonville, FL 32202 Omaha Office
LOUISIANA
Laguna Niguel Office 904.665.1000 1313 Farnam
New Orleans Office
24000 Avila Road GEORGIA 600 South Maestri Pl. Stop 1005-OMA
Room 3362 Atlanta Office Stop 2 Omaha, NE 68102
Laguna Niguel, CA 92677 401 W. Peachtree St., NW, New Orleans, LA 70130 402.221.4181
949.389.4804 Summit Building Stop 202-D 504.558.3001
NEVADA
Los Angeles Office Atlanta, GA 30308 Las Vegas Office
MAINE
300 N. Los Angeles St. 404.338.8099 4750 West Oakey Blvd.
Augusta Office
Stop1005-LA Room 5119 Room 303
HAWAII 68 Sewall St., Room 313
Los Angeles, CA 90012 Las Vegas, NV 89102
Honolulu Office Augusta, ME 04330
213.576.3199 702.455.1241
300 Ala Moana Blvd., H-405 207.622.8528
Oakland Office Honolulu, HI 96850
1301 Clay St. # 1540S MARYLAND NEW HAMPSHIRE
808.539.2870 Portsmouth Office
Oakland, CA 94612 Baltimore Office
510.637.2703 IDAHO 31 Hopkins Plaza Federal Office Building
Boise Office Baltimore, MD 21201 80 Daniel St.
Sacramento Office Portsmouth, NH 03801
550 West Fort St., Box 041 410.962.2082
4330 Watt Ave. 603.433.0571
N. Highlands, CA 95660 Boise, ID 83724
MASSACHUSETTS
916.974.5007 208.334.1324 NEW JERSEY
Boston Office
San Jose Office ILLINOIS 25 New Sudbury St. Springfield Office
55 S. Market St. Chicago Office Boston, MA 02203 955 S. Springfield Ave.
Stop HQ000-4 230 S. Dearborn St. 617.316.2690 Springfield, NJ 07081
San Jose, CA 95113 Stop 1005.CHI 973.921.4043
408.817.6850 MICHIGAN
Chicago, IL 60604 NEW MEXICO
Detroit Office
312.886.9183 Albuquerque Office
COLORADO McNamara Federal Building
Denver Office Springfield Office 477 Michigan Ave. - Room 1745 5338 Montgomery Blvd. N.E.
600 17th St. 320 W. Washington St. Detroit, MI 48226 Stop 1005-ALB
Stop 1005-DEN Stop 1005-SPD 313.628.3670 Albuquerque, NM 87109
Denver, CO 80202.2490 Springfield, IL 62701 505.837.5505
303.446.1012 217.527.6382

2001 TAX HINTS 27


Practitioner’s Guide to Filing Season

Taxpayer Advocate Contacts


NEW YORK RHODE ISLAND VERMONT CENTERS
Albany Office Providence Office Burlington Office Andover Center
Leo O’Brien Federal Building 380 Westminster St. Courthouse Plaza P.O. Box 9055, Stop 121
Clinton Ave. & N. Pearl St. Providence, RI 02903 199 Main St. Andover, MA 01810
Albany, NY 12207 401.525.4200 Burlington, VT 05401 978.474.5549
518.427.5413 802.860.2008
SOUTH CAROLINA Atlanta Center
Brooklyn Office Columbia Office VIRGINIA P.O. Box 48-549
10 Metro Tech Center 1835 Assembly St. Richmond Office Stop 29A
625 Fulton St. MDP 03 400 N. 8th St. Room 916 Doraville, GA 30362
Brooklyn, NY 11201 Columbia, SC 29201 Richmond, VA 23240 770.936.4500
718.488.2080 803.253.3029 804.916.3501
Buffalo Office Austin Center
201 Como Park Blvd. SOUTH DAKOTA WASHINGTON P.O. Box 934
Buffalo, NY 14227 Aberdeen Office Seattle Office Stop 1005-AUSC
716.961.4850 115 4th Ave. Southeast 915 2nd Ave. Austin, TX 78767
Stop 1005-ABE Stop W-405 512.460.8300
Manhattan Office Aberdeen, SD 57401 Seattle, WA 98174
290 Broadway 7th floor 605.226.7248 206.220.6037 Brookhaven Center
New York, NY 10007 P.O. Box 960
212.436.1011 TENNESSEE WEST VIRGINIA Stop 102
Nashville Office Parkersburg Office Holtsville, NY 11742
NORTH CAROLINA 801 Broadway 425 Juliana St. 631.654.6686
Greensboro Office Stop 22 Parkersburg, WV 26101
320 Federal Place Room 125 Nashville, TN 37203 304.420.6616 Cincinnati Center
Greensboro, NC 27401 615.250.5000 P.O. Box 1235, Stop 11
336.378.2180 WISCONSIN Cincinnati, OH 45201
TEXAS Milwaukee Office 859.292.5316
NORTH DAKOTA Austin Office 310 West Wisconsin Ave.
Fargo Office 300 E. 8th St. Stop 1005-MIL Fresno Center
657 2nd Ave, N. Stop 1005-AUS Milwaukee, WI 53203 P.O. Box 12161
Stop 1005-FAR Austin, TX 78701 414.297.3046 Stop 01
Fargo, ND 58102 512.499.5875 Fresno, CA 93776
701.239.5141 WYOMING 559.443.7590
Dallas Office Cheyenne Office
OHIO 1100 Commerce St., 5353 Yellowstone Rd. Kansas City Center
Cincinnati Office MC1005DAL Stop 1005-CHE P.O. Box 24551
550 Main St. Room 3530 Dallas, TX 75242 Cheyenne, WY 82009 Stop 1005-KCSC
Cincinnati, OH 45202 214.767.1289 307.633.0800 Kansas City, MO 64131
513.263.3260 Houston Office 816.926.2493
Cleveland Office 1919 Smith St. TAXPAYERS LIVING ABROAD
OR IN U.S. TERRITORIES Memphis Center
1240 E. Ninth St. Room 423 Stop 1005-HOU
A/C International P.O. Box 30309AMF
Cleveland, OH 44199 Houston, TX 77002
Mercantile Plaza Building Stop 12
216.522.7134 713.209.3660
2 Ponce De Leon Ave. Memphis, TN 38130
OKLAHOMA UTAH Stop 27 1/2 901.395.1900
Oklahoma City Office Salt Lake City Office Hato Rey, Puerto Rico 00918
Ogden Center
55 N. Robinson 50 South 200 East 787.622.8931
P.O. Box 1640
Stop 1005-OKC Stop 1005-SLC Spanish.787.622.8931
Stop 1005
Oklahoma City, OK 73102 Salt Lake City, UT 84111 English.787.622.8940
Ogden, UT 84402
405.297.4055 801.799.6958
801.620.7168
OREGON
Philadelphia Center
Portland Office
P.O. Box 16053
1220 S.W. 3rd Ave., Stop O-405
DP #1300
Portland, OR 97204
Philadelphia, PA 19114
503.326.2333
215.516.2499
PENNSYLVANIA 215.516.2677
Philadelphia Office
600 Arch St. Room 1602
Philadelphia, PA 19106
215.861.1290
Pittsburgh Office
1000 Liberty Ave.
Pittsburgh, PA 15222
412.395.5987

2001 TAX HINTS 28


Practitioner’s Guide to Filing Season

SEND Power of Attorney processing


COMPLETED and CAF procedures

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 center’s 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. • Didn’t indicate taxpayer’s ex-spouse
fax: 559.454.6334 status from a joint return.
Special request: If you fax a Form
Kansas City Centers 2848, please don’t mail a hard copy. Business Returns
PO Box 24551 Stop 6800 Don’t send a POA for each client as a • Didn’t 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 • Taxpayer’s 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.
• Representative’s name and address. • Didn’t include correct name, address
Philadelphia, PA 19154
fax: 215.516.5994 • Type of taxes. and SSN or EIN.
• Federal tax form numbers and years • Didn’t 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
• Representative’s signature, date and on notices (available 7 days a week,
designation. 24 hours a day):
Employee Plans
Memphis Centers • Taxpayer’s 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
Practitioner’s Guide to Filing Season

WHERE Power of Attorney cont’d.


Continued from page 29
TO CALL and tax forms you want covered by Form 8821 common error
FOR the authorization. (The IRS cannot
process Forms 2848 with general
• Didn’t answer item 4 correctly. If the
box is checked, the authorization will
HELP references to all years, all periods, not be entered on the CAF. If the
all taxes or specific issues. Example authorization is not for a specific use,
• To order forms, instruc-
of correct reference: Income Tax, do not check this box.
tions and publications:
Call 1.800.829.3676 to Form 1040, for calendar years 2000 Revocations
order current and prior and 2001.) • When you no longer represent a
year forms, instructions Form 8821 requirements taxpayer, the power of attorney must
and publications. • Taxpayer’s name, address, TIN and be revoked to avoid unauthorized
phone number. disclosures. The only people who can
• To ask tax questions:
• Appointee’s name, address and phone revoke a power of attorney are the
Call the IRS with your
number. taxpayer or the representative. Until
tax questions at
the power of attorney is revoked, the
1.800.829.1040. • Type of taxes, form number and
representative will continue to receive
• To ask questions about a starting and ending dates.
copies of notices and letters
notice: • Disclosure of Tax Information
• You can use a copy of a previously
Call the IRS with ques- Authorization.
submitted Form 2848 or 8821 to
tions about your balance
• Taxpayer’s signature and date (only revoke an authorization. Write
due at 1.800.829.8815.
one spouse’s signature is required). REVOKE across the top of the copy
• TeleTax topics: in bold letters. It must also be signed
• Must be received by the IRS within
Call 1.800.829.4477 to and dated.
60 days of taxpayer’s signature.
listen to prerecorded
messages covering
Facts about refund checks

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.

2001 TAX HINTS 30


Practitioner’s Guide to Filing Season

TRANSCRIPTS The Tax Return Transcript


& COPIES What is a tax return transcript?

I
Andover t’s 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 It’s 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 taxpayer’s 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
Practitioner’s Guide to Filing Season

DECEDENT Estate and Gift Tax


T
RETURNS he Estate and Gift Tax Staff may result, including delays in

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 decedent’s
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 didn’t match copy of the donor spouse’s 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
didn’t 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 wasn’t 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

2001 TAX HINTS 32


Practitioner’s Guide to Filing Season

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 don’t 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 taxpayer’s
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

2001 TAX HINTS 33


Practitioner’s Guide to Filing Season

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

Estimated tax penalties


Individuals, trusts, credits) and you expect your with- Exception: You do not have to
and certain estates holding and credits to be less than make estimated tax payments if you
If you expect to owe tax of $1,000 the smaller of: had no tax liability for the full 12-
or more for the tax year, you must • 90 percent of the tax shown on month 2000 tax year. Also, an
prepay the tax by having tax with- your 2001 tax return, or individual must be a U.S. citizen or
held or by making estimated tax • The tax shown on your 2000 tax resident alien for all of 2000.
payments. We charge a penalty when return (110 percent of that amount Due dates and
the total tax you pay during the year if you are not a farmer or fisher-
additional
doesn’t meet the requirements of the man and the adjusted gross
income shown on that return is
information
law.
more than $150,000 or, if married For 2001, estimated tax payments
Generally, to meet the require-
filing separately for 2001, more for calendar year taxpayers are due
ments of the law (and avoid the
than $75,000). (Note: This item April 16, June 15 and Sept.17, 2001
penalty), you must make estimated
does not apply if you did not file a and Jan. 15, 2002. You do not have
tax payments if you expect to owe at
2000 tax return or that return did to make the Jan. 17, 2002 payment if
least $1,000 in tax for 2001 (after
subtracting your withholding and not cover 12 months.) Continued on page 35

2001 TAX HINTS 34


Practitioner’s Guide to Filing Season

Estimated tax penalties


Continued from page 34
you file your 2001 tax return by Jan. at least $1 million of taxable income must submit a written support
31 and pay the entire balance due in any of the last three years. A large statement. You may request abate-
with your return. For due dates for corporation is prohibited from using ment of penalties for reasonable
fiscal year taxpayers and additional their prior year’s tax liability cause, but interest cannot be re-
information about estimated taxes (method (1) above), except in moved for reasonable cause.
and your 2001 tax liability, see Form determining the first installment of The statement should be filed
1040-ES, Estimated Income Tax for their tax year. Any reduction in a with the director of the service center
Individuals, or Form 1041-ES, large corporation’s first installment, where the tax return was required to
Estimated Income Tax for Estates as a result of using the prior year’s be filed. The declaration must be
and Trusts. tax, must be recaptured in the made under penalties of perjury and
For more information on when the corporation’s second installment. In must fully explain the facts related to
estimated tax penalty may be re- applying the $1 million test, taxable the reasonable cause. Abatement
duced or removed, see the instruc- income is computed without regard requests for certain penalties may be
tions for Form 2210, Underpayment to net operating loss carryovers or made by telephone to a toll-free
of Estimated Income Tax by Indi- capital loss carrybacks. number shown on the penalty notice.
viduals and Fiduciaries. Form 2220, Underpayment of Note: The tax must be paid before
Estimated Tax by Corporations, is the request can be considered.
Corporations
used to determine if the corporation Forgiveness of penalties is decided
A corporation with tax of $500 or
is subject to the penalty for under- on a case-by-case basis. Generally, if
more that fails to pay a correct
payment of estimated tax and, if so, the taxpayer exercised ordinary
installment of estimated tax in full by
the amount of the penalty. Generally, business care and prudence, and was
the due date may be subjected to an
a corporation does not have to file nevertheless unable to file the return
estimated tax penalty. The penalty
this form because the IRS will figure timely, the delay is considered due to
rate applies to the period of under-
the amount of the penalty and bill the reasonable cause. A failure to pay
payment for any installment. Com-
corporation. A corporation should may also be due to reasonable cause,
pute the penalty at the rate of interest
complete and attach this form to if the taxpayer exercised ordinary
published quarterly by the IRS.
their return if: business care and prudence but could
For tax years beginning after
• The annualized income installment not pay the tax liability. They must
December 31, 1993, the estimated
method and/or the adjusted show reasonable efforts to conserve
tax payment required in installments
seasonal installment method is sufficient assets in a marketable form
is the lessor of:
used, or in an attempt to pay the tax due
1. 100 percent of the tax shown on
• The corporation is a large corpo- before a failure to pay penalty will
the return for the preceding year,
ration, computing their first be abated.
if that year was a 12 month tax
installment based on their prior If the IRS determines that failure
year, and a return filed for that
year's tax. to file was due to reasonable cause
year showed a tax liability greater
The corporation should attach and not willful neglect, this penalty
than zero.
their annualized income worksheet to will not be assessed. The taxpayer
2. 100 percent of the tax shown for
Form 2220. would still be responsible for the tax
the current year (the current year
owed plus interest due.
tax may be determined on the Abatement of
Note: Late payment penalty and
basis of actual income or annual- penalties interest will be charged on any tax
ized income). The Internal Revenue Code,
paid after the original return due
Note: The fact that your prior year’s Section 6651 authorizes the abate-
date. Even if you are granted an
tax was zero does not exempt you ment of penalties for failure to file
extension to file, you still must pay
from this penalty. In this case, you tax returns and/or failure to pay tax,
all of your tax by the original return
should annualize your income. if that failure is due to reasonable
due date. You may be granted an
Large Corporation — For cause and not willful neglect.
extension to file, but not to pay.
purposes of paymemt of estimated Individuals requesting reasonable
Extensions to pay are only granted to
tax, a large corporation is one with cause consideration for a penalty
Continued on page 36

2001 TAX HINTS 35


Practitioner’s Guide to Filing Season

Continued from page 35 declaration to the protest:


INSTALLMENT “Under penalties of perjury, I declare
United States Estate Tax Returns (Form
AGREEMENT 706). that the facts presented in my written
REDUCES Penalty appeals
protest, which are set out in the accom-
PENALTIES panying statement of facts, schedules,
procedures and other statements are, to the best of
Taxpayers who don’t pay If an abatement of a penalty has been my knowledge and belief, true, correct
their taxes when they are due denied and you want to receive further and complete.”
may be subject to a failure- consideration by an Appeals officer, a If an authorized representative sends
to-pay penalty of .50 percent brief written statement of the disputed the protest, the following declaration
of their unpaid taxes for each issue must be submitted to the service may be substituted:
month or part of a month the center Appeals coordinator. “That he or she prepared the protest
tax is not paid. Beginning in Provide the following information: and accompanying documents, and
2000, if they file their return • The name and SSN or EIN of the whether he or she knows personally that
on time and enter into an taxpayer. the protest and accompanying docu-
installment agreement with • A statement that you want to appeal ments are true and correct.”
the IRS, this penalty will be the findings to Appeals. Attach Power of Attorney and
reduced to .25 percent. • A statement of facts supporting your Declaration of Representative (Form
Note: If the installment position in any contested factual 2848) or similar written authorization to
agreement defaults or is issues and your written statement. Send your
terminated, the normal • Any documentation supporting why request to:
failure to pay penalty charges you filed/paid your taxes late. Internal Revenue Service Center
will resume. • If available, include a statement Penalty Appeals Coordinator
outlining the law or other authority
on which you relied. The coordinator will review your
REMEMBER: additional information to determine
The statement of facts should be whether the penalty should be reduced.
Using labels saves time detailed and complete, including If the request for appeal cannot be
and increases efficiency. specific dates, names, amounts, loca- resolved immediately with the additional
None of the information tions, etc. It must be declared true information, the coordinator will
on an IRS preprinted under penalties of perjury. You may do forward the written statement to the
this by adding the following signed Appeals Office servicing your district.
label affects whether
taxpayers are audited. Refund Hold Program

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 don’t 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 taxpayer’s 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
Practitioner’s Guide to Filing Season

PAYMENT Reasonable cause


TIPS
abates penalties
I
Help your clients ensure
f a taxpayer asks for relief from when no reason exists to question the
that their payments are
paying penalties, they must follow legitimacy of the request.
properly credited by specific guidelines. Internal Rev- Reasonable cause determinations are
stressing the importance of enue Code, Section 6651, authorizes based on the facts and circumstances of
writing the following the abatement of penalties for failure to each case. Generally, if the taxpayer
information on their check file tax returns and for failure to pay exercised ordinary business care and
or money order: tax if the failure is due to reasonable prudence and was still unable to file the
• SSN or EIN. cause and not willful neglect. Individu- return on time, the delay is considered
• Tax period covered by als requesting reasonable cause consid- due to reasonable cause. A failure to
eration for a penalty abatement nor- pay also may be due to reasonable
the payment.
mally must submit a written supporting cause if the taxpayer exercised ordinary
• Current mailing ad- statement to their service center. business care and prudence, yet could
dress. CFR Section 301.6651 requires a not pay the tax liability in a timely
• Correct name of the tax written statement, signed by the tax- manner. The tax due must be paid
account. payer or representative with a Power of before a late payment penalty will be
Attorney, under penalty of perjury, that abated. If the IRS determines that
• Type of tax form associ- explains the facts related to the reason- failure to file was due to reasonable
ated with the payment. able cause. However, in the interest of cause and not willful neglect, the
• Make the check or fairness, the IRS accepts unsigned and penalty will be abated. The taxpayer is
money out to United oral requests (if the penalty is $250 or still responsible for the tax owed plus
States Treasury — not less) with the appropriate documenta- interest.
tion by the employee handling the case
the IRS.
It is even more important
to provide identifying LOCKBOX PROCESSING

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

2001 TAX HINTS 37


Practitioner’s Guide to Filing Season

LOCKBOX Form 1040 Form 940-EZ


ADDRESSES PO Box 105093 PO Box 210
Atlanta, GA 30348-5093 Newark, NJ 07101-0210
Note: All PO Box addresses
preceded by Form 1040-ES Form 941
Internal Revenue Service PO Box 105900 PO Box 416
Andover Center Atlanta, GA 30348-5900 Newark, NJ 07101-0416
Form 940 Form 4868 Form 943
PO Box 371307 PO Box 105073 PO Box 254
Pittsburgh, PA 15250-7307 Atlanta, GA 30348-5073 Newark, NJ 07101-0254
Form 940-EZ Form CP 521/523 Form 1040
PO Box 371324 PO Box 105572 PO Box 1187
Pittsburgh, PA 15250-7324 Atlanta, GA 30348-5572 Newark, NJ 07101-1187
Form 941 Form 1040-ES
Austin Center PO Box 162
PO Box 371493 Form 940
Pittsburgh, PA 15250-7493 Newark, NJ 07101-0162
PO Box 970017
Form 943 St. Louis, MO 63197-0017 Form 4868
PO Box 371475 PO Box 22423
Form 940-EZ Newark, NJ 07101-2423
Pittsburgh, PA 15250-7475 PO Box 970017
Form 1040 St. Louis, MO 63197-0017 Form CP 521/523
PO Box 371361 PO Box 22421
Form 941 Newark, NJ 07101-2421
Pittsburgh, PA 15250-7361 PO Box 970013
Form 1040-ES St. Louis, MO 63197-0013 Cincinnati Center
PO Box 371999 Form 940
Form 943
Pittsburgh, PA 15250-7999 PO Box 6977
PO Box 970015
Chicago, IL. 60680-6977
Form 4868 St. Louis, MO 63197-0015
PO Box 371410 Form 940-EZ
Form 1040
Pittsburgh, PA 15250-7410 PO Box 6796
PO Box 970016
Chicago, IL. 60680-6796
Form CP 521/523 St. Louis, MO 63197-0016
PO Box 371429 Form 941
Form 1040-ES
Pittsburgh, PA 15250-7429 PO Box 7329
PO Box 970001
Chicago, IL. 60680-7329
Atlanta Center St. Louis, MO 63197-0001
Form 940 Form 943
Form 4868
PO Box 105887 PO Box 6538
PO Box 970027
Atlanta, GA 30348-5887 Chicago, IL. 60680-6538
St. Louis, MO 63197-0027
Form 940-EZ Form 1040
Form 1041-ES
PO Box 105659 PO Box 6223
PO Box 970002
Atlanta, GA 30348-5659 Chicago, IL. 60680-6223
St. Louis, MO 63197-0002
Form 941 Form 1040-ES
Form CP 521/523
PO Box 105703 PO Box 7422
PO Box 970022
Atlanta, GA 30348-5703 Chicago, IL. 60680-7422
St. Louis, MO 63197-0022
Form 943 Form 4868
Brookhaven Center PO Box 6252
PO Box 105094 Form 940
Atlanta, GA 30348-5094 Chicago, IL. 60680-6252
PO Box 1365
Newark, NJ 07101-1365

2001 TAX HINTS 38


Practitioner’s Guide to Filing Season

Form 2290 Form 1040 Form 941


PO Box 6229 PO Box 970011 PO Box 7922
Chicago, IL. 60680-6229 St. Louis, MO 63197-0011 San Francisco, CA 94120-7922
Form CP 521/523 Form 1040-ES Form 943
PO Box 6220 PO Box 970006 PO Box 7353
Chicago, IL 60680-6220 St. Louis, MO 63197-0006 San Francisco, CA 94120-7353

Fresno Center Form 4868 Form 1040


Form 940 PO Box 970028 PO Box 7704
PO Box 60378 St. Louis, MO 63197-0028 San Francisco, CA 94120-7704
Los Angeles, CA 90060-0378 Form CP 521/523 Form 1040-ES
Form 940-EZ PO Box 970024 PO Box 510000
PO Box 60150 St. Louis, MO 63197-0024 San Francisco, CA 94151-5100
Los Angeles, CA 90060-0150
Memphis Center Form 4868
Form 941 Form 940 PO Box 7122
PO Box 60407 PO Box 1210 San Francisco, CA 94120-7122
Los Angeles, CA 90060-0407 Charlotte, NC 28201-1210 Form CP 521/523
Form 943 Form 940-EZ PO Box 7125
PO Box 60819 PO Box 1210 San Francisco, CA 94120-7125
Los Angeles, CA 90060-0819 Charlotte, NC 28201-1210
Philadelphia Center
Form 1040 Form 941 Form 940
PO Box 60000 PO Box 70503 PO Box 8726
Los Angeles, C . 90060-6000 Charlotte, NC 28272-0503 Philadelphia, PA 19162-8726
Form 1040-ES Form 943 Form 940-EZ
PO Box 54030 PO Box 1212 PO Box 8738
Los Angeles, CA 90054-0030 Charlotte, NC 28201-1212 Philadelphia, PA 19162-8738
Form 4868 Form 1040 Form 941
PO Box 54916 PO Box 1214 PO Box 8786
Los Angeles, CA 90054-0916 Charlotte, NC 28201-1214 Philadelphia, PA 19162-8786
Form CP 521/523 Form 1040-ES Form 943
PO Box 30507 PO Box 1219 PO Box 8526
Los Angeles, CA 90030-0507 Charlotte, NC 28201-1219 Philadelphia, PA 19162-8526

Kansas City Center Form 4868 Form 1040


Form 940 PO Box 1236 PO Box 8530
PO Box 970010 Charlotte, NC 28201-1236 Philadelphia, PA 19162-8530
St. Louis, MO 63197-0010 Form CP 521/523 Form 1040-ES
Form 940-EZ PO Box 1233 PO Box 8318
PO Box 970010 Charlotte, NC 28201-1233 Philadelphia, PA 19162-8318
St. Louis, MO 63197-0010
Ogden Center Form 4868
Form 941 Form 940 PO Box 7990
PO Box 970007 PO Box 7024 Philadelphia, PA 19162-7990
St. Louis, MO 63197-0007 San Francisco, CA 94120-7024 Form CP 521/523
Form 943 Form 940-EZ PO Box 8669
PO Box 970009 PO Box 7028 Philadelphia, PA 19162-8669
St. Louis, MO 63197-0009 San Francisco, CA 94120-7028

2001 TAX HINTS 39


Practitioner’s Guide to Filing Season

TAX
TAX HINTS
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2001 Filing Season: The Professional’s Guide


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2001 TAX HINTS 40