Warning: Use of undefined constant wp_cumulus_widget - assumed 'wp_cumulus_widget' (this will throw an Error in a future version of PHP) in /home/www/cpa-la.com/wp-content/plugins/wp-cumulus/wp-cumulus.php on line 375
TIGTA: Revise Form 1099-R to Improve Taxpayer Compliance - Emil Estafanous, CPA : Emil Estafanous, CPA

TIGTA: Revise Form 1099-R to Improve Taxpayer Compliance

In a news expelled on Feb 7, a Treasury Inspector General for Tax Administration (TIGTA) endorsed a IRS change a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to urge taxpayer correspondence with stating and profitable taxation on this form of income (TIGTA, Opportunities Exist to Identify More Taxpayers Who Underreport Retirement Income (2012-30-011) (1/30/12)).

TIGTA achieved an review of comparison 2007 taxation earnings to establish if a IRS has effective controls and processes in place to safeguard that taxpayers and retirement income payers are computing and stating a taxable apportionment of retirement income correctly.

The IRS has estimated that underreported retirement income combined $4.2 billion to a taxation opening in 2001. For 2008 and 2009, taxpayers filed approximately 21 million earnings stating $293 billion in income from IRAs, and approximately 52 million earnings stating $1 trillion in income from pensions.

In a audit, TIGTA found that taxpayers are receiving paradoxical and treacherous information on Forms 1099-R that they receive. Some of a difficulty stems from Forms 1099-R that news a taxable amount, though also have a box checked indicating that a taxable volume could not be determined. TIGTA says a Form 1009-R instructions need some payers to finish a form this way.

TIGTA also reported that some taxpayers accept Forms 1099-R stating sum placement amounts though with a taxable volume left blank. Current IRS discipline do not need a payer to always embody a taxable volume on Form 1099-R when it can't be determined.

Among a changes TIGTA endorsed were:

  • Clarify a definition of “Taxable volume not determined” in box 2b of Form 1099-R to revoke taxpayer difficulty (the stream Form 1099-R instructions for recipients state, if box 2b is “checked, a payer was incompetent to establish a taxable amount.”). According to TIGTA, a IRS should clearly promulgate that a taxpayer is obliged for last a taxable amount.
  • Include a dates of distributions and transfers on Form 1099-R and Form 5498, IRA Contribution Information, to capacitate a IRS to brand distributions not rolled over within a 60-day limit.
  • Establish procedures to register additional lines from several taxation forms (this territory of a news is heavily redacted, though a clear partial suggests converting a simplified process worksheet that taxpayers finish in last a taxable and tax-free volume of their grant into a taxation form that is compulsory to be filed with a taxation return).

The IRS responded to these suggestions by similar to explain a box 2b, taxable volume not determined, instructions. However, a IRS did not determine that including a dates of distributions and transfers would boost compliance. It concluded to investigate either requiring taxpayers to record a worksheet and including any other forms in stating would boost correspondence but burdening taxpayers too much.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

Our clients are located throughout Southern California in cities such as Los Angeles, CPA: Whittier, Santa Fe Springs Accounting, Artesia, Cerritos CPA, Bellflower: Tax Preparation, Payroll: Downey, La Palma, Accountant: La Mirada, IRS Representation: Lakewood , Gardena, La Habra, Brea, Rancho Dominguez, Hacienda Heights, Torrance, Diamond Bar, South Bay, Pomona, Carson, Buena Park, La Puente, Orange, Anaheim, Fullerton, Seal Beach, Costa Mesa, Irvine, Garden Grove, Huntington Beach, Santa Ana, Hawthorne, Santa Monica, Montebello, Pico Rivera, Newport Beach, Hollywood, and many more.