The Internal Revenue Service is cautioning tax preparers about delays in processing tax returns claiming the Child Tax Credit because of incorrectly filled out forms.
“We have observed instances in which the Schedule 8812 is attached to form 1040 and 1040A and is not filled out correctly,” the IRS wrote in an email to tax professionals Monday. “These instances are causing downstream processing delays.”
The IRS noted that it has experienced the following two conditions: (1) The Schedule 8812 Part 1 checkboxes A, B, C, and D are checked when taxpayers list a dependent child with a Social Security Number qualifying for the Child Tax Credit; and (2) the Schedule 8812 Part 1 checkboxes A, B, C, and D not being checked when taxpayers have a child with an Individual Taxpayer Identification Number, or ITIN, on Form 1040 and 1040A line 6c identified as qualifying for the Child Tax Credit in column 4.
The Schedule 8812 instructions direct the taxpayer, the IRS noted, to “use Part I of Schedule 8812 to document that any child for whom you entered an ITIN on Form 1040, line 6c; Form 1040A, line 6c; or Form 1040NR, line 7c; and for whom you also checked the box in column 4 of that line, is a resident of the United States because the child meets the substantial presence test and is not otherwise treated as a nonresident alien.”
The IRS said it is working to implement business rules to reject these incorrectly completed returns, but the date of the fixes has yet to be determined.
In the meantime, the IRS is requesting tax prep software providers to include an alert to help tax preparers identify inconsistencies when they are completing the Schedule 8812. It also asked for communication with the tax practitioner community to avoid delays in processing tax returns.
An Accounting Today reader also warned Monday evening that the IRS has been sending letters to tax practitioners informing them that Form 8867 was not completed correctly, resulting in unnecessary processing delays in client refunds because either questions 22 or 23 were not answered. However, if the children in question are the taxpayer’s son or daughter, this question does not apply, the reader noted. Practitioners may also be informed that questions 26 a or b were not answered, or the box labeled "no qualifying child" or the box labeled "no disabled child."
13 Comments
I have six clients who have not received their refunds that were accepted on Jan 31, 2013. Two have called the IRS and have been told that their preparer (ME) made a mistake on Form 8812. I did NOT make a mistake on 8812, the IRS has made mistakes in not knowing their own forms. I did not appreciate the telephone operator at the IRS telling my clients that I had made a mistake when after carefully reviewing my prepared forms, there is no mistake on there.
I agree with the other commenter that the IRS could make their instructions a bit clearer.
I did have one return rejected today because I did not check box A in Part I on Form 8812 when Box A DOES not apply to this taxpayer. Her dependant child has a SSN and not a ITIN. I agree that I do not know what to tell my clients who are very unhappy with me. It is a very frustrating tax season so far.
Posted by: jones4730 | February 21, 2013 10:49 AM
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a lot of the problems with the form 8812 tax credit could be eliminated if the IRS had written clear instructions. In the first sentence, they could have said "this section does not apply to children who have social security numbers. it is only for children who have been issued ITINs."
Posted by: phdesmond | February 15, 2013 3:23 PM
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Responding to tias tax: I am having the same problem with EITC. I filed 2/1/13, and none of my clients have received a refund. Frankly, none of the returns I filed have been funded. The 5 -8 days average has not worked in my case. However, my tax preparer friend's returns that contained Child Tax Credit, and EITC have been funded. She said she only has a few returns with EITC that she was still waiting to be funded.
Posted by: jaaziel | February 15, 2013 3:15 PM
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SNAFU, I feel you. I am having a similar problem. I am having problems e-filing returns with Form 8863, for the Education Credit. It is not the IRS - it is the software that is preventing them from being e-filed. I have been contacting the software technical support, and they are aware of the problem and said they are working on a patch, but as of today, I am still unable to file returns with Form 8863. I agree, this is very frustrating and annoying. I am dreading the returns with Form 4562, last year I had a reject problem with them.
Posted by: jaaziel | February 15, 2013 3:06 PM
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When will all tax preparers act like professionals and stop making insulting comments about certain licensed professionals? In all groups there are good and bad - does making those kind of comments make anyone feel more superior? Let's work together and act like professionals.
Posted by: KMaharCPA@aol.com | February 15, 2013 6:50 AM
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I want to know if anyone else is having the same problem? All my clients with the EITC credit that were filed the first week have not been approved for a refund? As pamlaw3 mentioned that the IRS changed it's mind after the start of tax season. What are we to explain to our clients when the software and the IRS can't decide or agree to successfully submit so many forms and requirements???
Posted by: tias tax | February 13, 2013 10:46 PM
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Has anyone notice that the IRS did not require questions 22 through 24 to be filled out until after the filing date had already started. On january 30 the the IRS did not require those questions to be filled out on form 8867 and last week changed its mind and started saying tax preparers aren't sending in completed 8867 forms when they are to blame. Isn't is amazing how tax preparers are being blamed for something they didn't require initially. You would think they would be big enough to accept responsibility for their own mistakes rather than blame someone else. Notice too, that these returns were accepted by them. If the forms were not completed or filled out correctly that they would have rejected them but they didn't. Where does the fault lie, certainly not with the preparers.
Posted by: pamlaw3 | February 13, 2013 1:50 PM
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Has it occurred to anyone that when the IRS says "Professional Tax Preparers" they may be referring to ANYONE who right now is preparing taxes? That would include i.e., EA, CPAs, Attorneys, Tax Attorneys and all the others! Why is everyone jumping to conclusion and assuming all the errors are being made by tax prepares whether they took the exam or not? I know some attorneys and CPA who could use CE just to learn how to write their names...So. Let's just get off the backs of the tax prepares and not assume that every time the IRS reports errors those errors are being made by them. Has anyone looked at the statistics regarding, who, in all our professions, makes more errors with the IRS? You may want to check those....they are surprisingly interesting!!!
Posted by: SNAFU | February 13, 2013 10:46 AM
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NICKIE: CPE credits for properly filling in Form 8812? Hell, why not CPE credits for spelling their Preparer Name properly? :-(
Posted by: tego@verizon.net | February 12, 2013 2:03 PM
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WOW!! what a mess. Tax preparers do not know how to fill out Schedule 8812 properly????? Bad business. The IRS should host webinars on how to report as well as how to fill out certain schedules and forms weekly as apart of CE credits; if not, it should be done through the software company as earned CE credits.
Posted by: NICKIE | February 12, 2013 12:06 PM
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Thank you for letting me know. I will have to call my sofware company and ask them where the updates are!
Posted by: SNAFU | February 12, 2013 11:17 AM
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I e-filed 2 S corporation tax returns, both with Form 4562 and they were both accepted within a couple of hours.
Posted by: amgtaxpro | February 12, 2013 10:54 AM
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The IRS said that it cleared form 4562 on February 10. I still have problem e-filing the returns that contain form 4562 among other forms. Is anyone else having the same problem? I am trying to find out if the IRS is being sluggish or if I need to call my software provider and ask them to check the updates. Will some one please let me know? I have a pile of returns that cannot be e-filed due to one form or another. It's very annoying and disrupting. If someone has the time to answer my question I would really appreciate it! Thank you.
Posted by: SNAFU | February 12, 2013 9:53 AM
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