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IRS’ Improved e-File System Is a Total Success Except For Two Jerks Who Foiled It

Posted on by Adrienne Gonzalez

It's a project ten years in the making and in case you didn't get the memo, the Modernized e-File system officially replaced the Legacy e-File system this filing season. What does this mean? Hell if I know. I do know that every single electronic return went through the MeF this filing season, which means they can retire the old one and everyone will live happily ever after in THE FUTURE.

“The Modernized e-File project has been a labor-intensive effort lasting more than a decade to revolutionize the way taxpayers transact and communicate with the Internal Revenue Service,” said J. Russell George, Treasury Inspector General for Tax Administration. “So the latest fruit of this effort, the successful migration of processing all individual tax returns to this system and retirement of the Legacy e-File system, can certainly be viewed as a significant milestone for the Internal Revenue Service.”

As of May 4, 2013, the IRS received approximately 129 million e-filed Tax Year 2012 Forms 1040, U.S. Individual Income Tax Return, TIGTA found. The IRS accepted approximately 114 million (88 percent) of the 129 million tax returns and rejected more than 15 million (12 percent) tax returns.

According to TIGTA, it's mostly working, except for these two clowns from the sample pool who threw off the system:

The MeF system processed most tax returns correctly. TIGTA’s review of a statistical sample of 560 Forms 1040 tax returns received by the IRS from January 30 through May 4, 2013, found that 558 tax returns (99.6 percent) were processed correctly. TIGTA found that the MeF system did not identify the remaining two tax returns for taxpayers who appeared to have a requirement to pay self-employment tax but did not pay it.

Further review of the tax returns with qualifying self-employment income on Schedule C, Profit or Loss From Business, filed from January 27, 2013, through June 29, 2013, for which the taxpayer did not pay self-employment tax, identified additional taxpayers with self-employment income for whom IRS records showed that they were not exempt from paying self-employment tax.

If you have absolutely nothing to do for the rest of the week, feel free to check out the 27 page report on MeF from TIGTA here [PDF].

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The AICPA Doesn’t Mind If You Copy and Paste Their Letter for the Expressed Purpose of Telling the IRS That the Preparer Regs Suck

The AICPA is following the ABA’s strategy of mass letter sending by urging its members to inundate the IRS with tearful pleas to reconsider the Service’s Tax Preparer Registration Proposal.

The issue is so serious that the Tax Vice President, Edward Karl, went on the Hill today to testify about the AICPA’s concerns, in what had to have been one raucous hearing:

The AICPA has serious concerns that the proposed IRS regulations are an overreach and would place immense burdens on CPA firms, particularly small- and medium-size firms. Further, the AICPA questions whether the IRS has adequately examined the costs that would be imposed on tax preparers and American taxpayers.

The IRS has proposed four broad new requirements for paid tax return preparers including: mandatory registration, application of enforceable ethical standards, competency testing and continuing education requirements. At [today’s] hearing, the IRS specifically requested comments about registration and the fees tax preparers will be charged for newly required personal taxpayer identification numbers, or PTINs.

While the AICPA has consistently supported the IRS’s efforts to increase tax compliance and elevate ethical conduct through the adoption of a registration process for paid tax return preparers, the AICPA does not believe other elements of the policy are fully justifiable or necessary, according to Karl.

The AICPA is urging all of its 360,000 members to contact the IRS about the proposed regulations to express opposition to elements of the plan.

Adrienne urges everyone to do the copy and paste thing ASAP and since there’s no mention of the IRS being anti-form letter, then we’d probably say that it’s safe to proceed with the letter with the AICPA’s language.

That being said, that’s a pretty boring approach and if you can muster the passion of either side of the fair value debate, we suggest you write from the heart.

Boston Scientific Corp. Will Gladly Spend ‘Several Years’ Taking Issue with the IRS’s Notion That They Owe $525 Million

It’s not that they don’t have the money; it’s the principle of the matter:

The Natick, Mass., medical-device company, which purchased Guidant in 2006, said it received a “notice of deficiency” from the IRS on Dec. 17 relating to the 2001 through 2003 tax years for Guidant and subsidiary businesses. “The incremental tax liability asserted by the IRS with regard to the Guidant claim is $525.1 million plus interest,” Boston Scientific said in a filing with the Securities and Exchange Commission.


Besides, the issue is related to transfer pricing which isn’t exactly cut and dry, so the company figured they’ll explore the differences they have. Besides there’s no rush to pay up:

The company said the main issue under dispute is transfer pricing linked to technology license agreements between certain domestic and foreign Guidant subsidiaries.

“We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment,” the company said.

It noted that no payments on this assessment are required until the dispute is definitively resolved, which could take “several years” based on experiences of other companies.

Boston Scientific Says IRS Seeks $525.1 Million in Taxes [WSJ]