Form 8960 IRS Processing Error Creating Erroneous Refunds

[dbarberi]

Just a heads up in case you have not yet encountered this issue: When the IRS corrected the "reject" issues related to Form 8960, they still managed to get it wrong. Now taxpayers are receiving refunds of the net investment income tax if their return includes both a Form 8960 and Schedule C income. Instead of the IRS programming simply zeroing out Schedule C income from an active business when computing the NIIT, it's processing the net Schedule C income as a negative when computing the NIIT, thereby reducing or eliminating the NIIT and creating refunds. One client received a check today (March 29) for a return submitted via e-file on March 1. Haven't heard anything myself as to whether the IRS is aware of the problem or has again tried to fix the software related to their processing of Form 8960. I have alerted those clients with the combination of Form 8960 and Schedule C. Am holding off on filing two returns until I have heard that the IRS is aware of the problem and correcting the issue. Has anyone else faced this issue or can anyone tell me if IRS is correcting?

[PATAX]

Thank you for the information