The Internal Revenue Service is offering an updated way to handle problems with the Form 8949, which has been having issues this past tax season.
For Form 8949, “Sales and Other Dispositions of Capital Assets,” the IRS said in an email to tax professionals Thursday that some filers are required to attach a broker statement to the Form 8949 instead of reporting each transaction on a separate row.
The IRS said that in order to reduce taxpayer burden, the instructions for Form 8949 are being revised to allow for a statement to be provided upon request.
“Filers who are using Exceptions I or II should do the following instead of attaching the statements: On Form 8949 Part I and/or Part II Column 1(a) enter the broker's name and the phrase "available upon request," leave column 1(b) and column 1(c) blank and enter code "M" on column 1(f). Taxpayers should refer to the Form 8949 Specific Instructions ‘Exception to reporting each transaction on a separate row,’ for additional requirements.”
In a later follow-up email on Friday that superseded the previous QuickAlert from Thursday, the IRS instructed tax professionals to follow the guidance provided in the “known e-file issues and solutions” on the 2012 Valid XML Schemas and Business Rules for 1120, 1120S, 1120-F, and 7004 Modernized e-File (MeF) Web page.
On that page, the IRS described a problem in the Adjustments to Gain or Loss field in which the 2012 instructions for Form 8949 state that “if more than one code applies, enter all the codes that apply in alphabetical order (for example, “BOQ”). Do not separate the codes by a space or comma. However, the TY12/PY13 Form 8949 schema element AdjustmentsToGainOrLossCd columns 1(f) and 3(f) allow multiple codes with commas.” The temporary solution to this problem is that If more than one code applies, the IRS suggested entering all the codes that apply in alphabetical order, and separating the codes with a comma.
In another glitch on the same form involving the bad debt statement, the IRS noted that per the instructions on Schedule D for Form 1065, the Form 8949 asks for a statement to be attached to Part I Line 1, column (a), regarding a bad debt. Currently the XML for this statement has not been developed. “The General Dependency Medium should be used for all TY2012/PY2013 returns,” the IRS said, adding that an XML schema will be developed for tax year 2013 in fiscal year 2014.
Any questions or comments should be directed to the IRS’s e-help desk at 1-866-255-0654.