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IRS letter 12C

Technical topics regarding tax preparation.
#1
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This is the first time I've ever seen this letter. I went to IRS.gov and researched it, but there's no more information there that isn't in the body of the letter. It seems like a giant nothing, a waste of time and money. They are asking for verification of things like estimated payments - there are none, totally W-2 withholding. They want us to include a copy of pages 1 and 2 of the return with our response and any supporting documents verifying income and withholding, and again, all of it is W-2, 1099R, 1099 INT and 1099 Div, all of the latter is very small. They had some gambling winnings this year and last year, but that shouldn't be much of question mark. I don't see the reason for this letter unless it's a mail audit? or something of that nature.T There is a K-1 with a loss, but even that's not really huge.
 

#2
Joan TB  
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Maybe something isn't matching with your input vs the documents the IRS has (W2, 1099, etc.). Could even be that the issuer of the document made an error. Of maybe you made an input error. (took me a LOOONNNNG time to catch my one-digit error once!!!) Anyway, suggest you just send copies as requested.
 

#3
CathysTaxes  
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I had this happen once. New client never told me about estimated payments they made. Plus for some reason IRS showed withholding from 1099R on the estimated payments line. I checked what I had and it was correct. I called the number on the notice and the revenue agent fixed it while I was on the phone.
Cathy
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#4
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I just put together a package with all the documents we have showing all $2 of the dividends, $54 of interest, $1200 from a little retirement fund. Nothing on this return that makes it worth the stamp even, but, oh well. We'll see what they say.
Last edited by actionbsns on 18-May-2018 11:51am, edited 1 time in total.
 

#5
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Is there any chance this could be a case of stolen identity?
 

#6
WEISSEA  
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This is the first time I've ever seen this letter.

Is the letter from Fresno input operations? I have had 3 or 4 silly 12C letters this year saying they need more info to process. 2 wanted copy of 1040 pages 1 & 2 of the efiled return. 2 wanted more info on line 21 inputs. 1 wanted client to sign page 2 of 1040 they printed from the e filed return.
 

#7
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Action, sounds like perhaps they never received a copy of the W-2 that your client is reporting, and are trying to verify withholding.
 

#8
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In the past, when I have received letters of this type from the IRS, I have been able to fax the documents directly to the IRS.

Otherwise, your stuck mailing them certified mail / return receipt. Mailing anything of this nature to the IRS any other way is really not advised based on my past experience.
 

#9
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I got one of these for 2016 from the Fresno office. It was rather baffling. We prepared and submitted the W-2s and all payments were via withholding.
I sent a letter in response and three weeks later the client received their refund. Odd.
~Captcook
 

#10
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Yes, the letter comes from Fresno, yes, we can FAX it, but I'm sending it certified. I usually do send these responses certified because I want proof of delivery. I don't think it's an issue with stolen identity, I had that happen with a client a few years ago and the entire process was very different. The letter implies there could be a delay of their refund for 6-8 weeks, all $300 of it. It's just an overwhelmingly silly letter like Weissa says. Coming from an agency complaining of a shortage of personnel and funds, it's even sillier.
 

#11
WEISSEA  
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yes, we can FAX it, but I'm sending it certified

I have client mail also as fax has no confirmation. Had 1 Lttr 12C last month for client who had probate executor fees from administering her sisters estate. No 1099-MISC issued. Put the fees on line 21 other income. Client got 12C saying income subject to SE tax and they must file Schedule C or they would not process return. Sent them 2 pages form Pub 559 saying if executor not a professional then put on line 21 not subject to SE. Seems like they moved the audit function up front to Input Processing. Hung up my clients refund for extra 5 weeks.
Did another 12C this morning, client filing MFS to avoid CA 1% mental heath tax on taxable incomes over $1M. No problem in 2016 sailed right through. 2017 they needed to see W-2 even though I pdf'd a copy with the efiled return. Hanging up $50K refund for extra 6 weeks. Maybe should have mailed the return in.
 

#12
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Tax return electronically filed in mid March 2018. Client received 12C letter for 2017 on April 12, 2018. I sent all W-2's and 1099-R's to support withholding, certified mail return receipt on April 13, 2018. Proof of delivery on April 16, 2018. Called tax practitioner priority line this morning. Representative wouldn't tell me anything other than "refund was supposed to be mailed on May 1st but I have no notes to determine if it WAS mailed. If taxpayer doesn't receive refund in 8 weeks from May 1st, you'll need to refile tax return with a paper copy". Refund is over $25K. Extremely frustrating. If client owed money to the IRS, he certainly wouldn't get three months (or more) to pay. My next call is to the Taxpayer Advocate Service.
 

#13
CathysTaxes  
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Leslie Fleming wrote:Tax return electronically filed in mid March 2018. Client received 12C letter for 2017 on April 12, 2018. I sent all W-2's and 1099-R's to support withholding, certified mail return receipt on April 13, 2018. Proof of delivery on April 16, 2018. Called tax practitioner priority line this morning. Representative wouldn't tell me anything other than "refund was supposed to be mailed on May 1st but I have no notes to determine if it WAS mailed. If taxpayer doesn't receive refund in 8 weeks from May 1st, you'll need to refile tax return with a paper copy". Refund is over $25K. Extremely frustrating. If client owed money to the IRS, he certainly wouldn't get three months (or more) to pay. My next call is to the Taxpayer Advocate Service.

My client also had an incredibly large refund. Retired couple took all of the funds out of an IRA. They had 20% withholding. Their financial advisor got to them within 60 days to roll it over. Most of the money was rolled over. There wasn't a 1099R with distribution code of G.
Cathy
CathysTaxes
 

#14
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Weissea -
I have client mail also as fax has no confirmation


Every time I have faxed the documents, the no confirmation issue crosses my mind but up to this point, have yet to have a problem and I certainly document date and time of fax on my cover sheet.

Also for any IRS correspondence - I would never even consider having the client mail anything. As the representative for the client with a POA on file, I consider that my function.

Yes - some of this IRS mail is a total PITA and unnecessary but it's the system we have to deal with and we are just the middle man/woman representing our clients to the best of our abilities. It's what we do and why we get paid the big bucks!
 

#15
makbo  
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I don't suppose we'll ever see comments here about the 12C letters that were justified. It's a matter of false positives versus false negatives. We know there are huge number of false negatives (returns that sail through even though they have mistakes whether unintended or deliberate - a.k.a. "the tax gap"), so perhaps a few false positives (correct returns that are held up) are a small price to pay for reducing the false negatives.
 

#16
WEISSEA  
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"I would never even consider having the client mail anything. As the representative for the client with a POA on file, I consider that my function."

Agree, but this is not a POA situation or a CP2000. These Input Corrections Notices have a 20 day repsonse time(return not processed and refund being heldup) with 1 week lost just getting the letter. Remote client may need to sign response, so sometimes more efficient for client to do the mailing.

"Yes - some of this IRS mail is a total PITA and unnecessary but it's the system we have to deal with ."

The Notices we are discussing are out of the ordinary(e.g. asking taxpayer who has a simple return with no refund, for an original signature on p2 of an IRS printed 1040 from the taxpayers e filed return which also has a valid IRS acceptance Form 9325) indicating a possible systemic problem that is costing both the government and the taxpayer time and money. Don't we have a duty to report to local society IRS rep to investigate?
 

#17
BTJig  
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They flagged the return as suspicious, and want some additional data to confirm the identity of the parties, they do this by asking for documents and information only the actual taxpayer would have. That is one explanation I've seen bandied about.

Some folks in my office think the IRS is using this to recalibrate their DIF system. Who knows.
 


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