Barber was right this time and smart

[PATAX]

Went to get my haircut today, and the barber told me he received an IRS notice for payment. They claimed he owed an amount for an estimate. So he went to the credit union and verified that the check cleared. He used a certified Bank check, which was pretty smart on his part. The credit union gave him proof that the check did indeed clear. He said he mailed the certified Bank check with the estimated tax form . So it looks like something wasn't processed correctly on the IRS side. This confirms what an instructor said at a recent webinar. She said she's had an issue with a 941 return for a couple of years and she's had enough and I believe she said that she is going to contact her Federal representative. She also said Apparently the IRS is now using scanners, and those scanners are not correctly processing the 941 returns sometimes. She recommended not to apply an overpayment to the next quarter, and just ask for the cash refund.

[IRonMaN]

Sorry, I didn't recognize you at first with that new haircut.  

[PATAX]

Heidi has never had a haircut. When she was a puppy I asked the groomer and she said not to cut her hair. But I do brush her all the time. She has a beautiful coat, not like some of the German shepherds that have straw like hair. But Heidi has a little bit of Border Collie in her, and that has made her even more intelligent, since Border Collie is the most intelligent breed.

[IRonMaN]

For the record, this has gotta be the smartest breed.  You can't be both beautiful and extremely smart.  So what this dog misses in beauty has to be made up with smarts.

[PATAX]

Lord have mercy

[BobKamman]

Good reason to pay online.  Did the credit union give him a copy of the front and back of the check?  That will help IRS find where the payment was applied.  Were his SSN and tax period written on the check?  If not, and the check was separated from the voucher, IRS would have to use the "unidentified remittance" function of its primitive computer terminals to track it down.  

"Apparently the IRS is now using scanners" -- come on now, you know better than that.  The banks that IRS has hired as private contractors for their "lockbox" operation, might be using scanners.  Someone has to feed the scanners, of course, but those aren't IRS employees.  This work was farmed out decades ago, to make it look like federal government employment was shrinking.  Some jobs, like handling tax collection, really should be left to government employees.  Look at the problems that faced Putin, when he hired private mercenary groups to fight his wars in Ukraine and Africa.  

[PATAX]

Bob I do not know all of the details as I do not do his tax returns. He said the credit union took care of it and verified that the certified bank check was deposited. Also as far as the scanners go, I am just repeating what I have heard at webinar from instructor, who is a former IRS agent I believe. I also believe that I read somewhere this . Apparently when covid-19 hit, and a lot of the employees were not working at the office, apparently they started using scanners. But I don't know for sure. To me it doesn't matter, as the IRS is ultimately responsible whether a subcontractor did it or not. I know  941 return for my client was not processed correctly and other cpas have said the same thing. Never had a problem with the 941 returns before covid-19. @dkh I think can back me up on this.

[BobKamman]

Surely you know that those vouchers you give your clients for mailing ES payments are not addressed to an IRS facility.  Nor are Forms 941 with payments mailed to an IRS service center.  I know the guy is not your client, but why would he need to send a cashier's check?  When the private lockbox receives a check from the Beaver Creek, Blue Ball and Climax Federal Credit Union, how do they know where to apply it, if the voucher it came with goes astray?

Speaking of reasons IRS should not hire government contractors, this news just in:

An Internal Revenue Service (IRS) consultant was charged today with disclosing tax return information without authorization.

According to court documents, Charles Littlejohn, 38, of Washington, D.C., while working at the IRS as a government contractor, stole tax return information associated with a high-ranking government official (Public Official A) and disclosed it to a news organization (News Organization 1). Littlejohn also stole tax return information for thousands of the nation’s wealthiest individuals, and disclosed this tax return information to another news organization (News Organization 2).

Littlejohn is charged with one count of unauthorized disclosure of tax returns and return information. If convicted, he faces a maximum penalty of five years in prison.

[PATAX · Accepted solution]

Actually Bob I do not know exactly what facility they go to, but I do know that it's the IRS responsibility. I always assumed that the IRS was getting the estimates and the 941 returns, but you may be correct and it may be outsourced. But it doesn't matter as they are responsible. The 941 returns that were screwed up with my clients did NOT have checks attached , they were returns that had refunds that were supposed to be APPLIED to the next quarter . Instead of the IRS applying the refunds, they sent check refunds, but they did not do it until MONTHS after the 941 return was filed, and the subsequent 941 return for the next quarter was given credit by us for the overpayment applied to it. We returned the checks to the IRS along with a letter . They did not process the letters in a timely fashion because of the covid backup. Therefore the subsequent 941 returns were screwed up in their eyes as client was not given credit for the overpayment applied even though the check was returned, And incorrect irs notices followed. This NEVER happened before covid-19 . How hard is it to read a box that is checked APPLY. Therefore it is obvious to me that something happened since the onset of Coronavirus , since this never happened to me even once prior to covid, and I would not be surprised if scanners were being used to read 941 return.  As far as why he used the certified Bank check, I also thought the same thing that you did, and found it to be a little odd. But he has a French first name, even though he is Italian, so that tells me what I need to know.😉🤔

[BobKamman]

Yes, the processing of 941 forms was delayed during Covid.  If a third quarter return was not processed by the time a fourth quarter return was filed, the credit-elect would not be carried over.  Instead, it would be refunded.  I'm not sure how a refund could occur on a 941, since deposits aren't made until the liability is known, but maybe there were some oddball credits that people could claim back then.  

[PATAX]

Bob, what a lot of accountants would do would be to deposit a little bit more then what the specific amount may end up being, and They would do this just in case there was a end of quarter bonus, or higher payroll than expected,  etc,  and the client would not bring the books in until after the deposit was due (Keep in mind that some clients are not rocket scientists and the actual payroll may be different than what they thought, i.e. more) So therefore they would make sure they would deposit a little bit more during the quarter, and then if there was a refund they would apply it to the next quarter, as a cushion for the same thing in future. The IRS didn't mind if you deposited more, since they got to hold the money. It's only if you deposit less that there's a problem, which you know.

[qbteachmt]

"Littlejohn also stole tax return information for thousands of the nation’s wealthiest individuals, and disclosed this tax return information to another news organization (News Organization 2).

Littlejohn is charged with one count of unauthorized disclosure of tax returns"

Ah, IRS math in action.

[sjrcpa]

@qbteachmt 

I think this answer was meant for a different post.

[BobKamman]

Don't blame IRS and the Treasury Department for Justice Department decisions.  Prosecutorial discretion allows for a simple case to go to a jury after a simple trial or, more likely, a simple plea agreement when multiple counts would only result in concurrent sentences.  And if there is no conviction, maybe another case can be filed for those not originally charged.  

[qbteachmt]

"I think this answer was meant for a different post."

Bob drifted off into prosecution (again).