2001tax hints - irs.gov · modernization effort. practitioners are a critical part of the tax...

Practitioner�s Guide to the Filing Season

2001TAXHINTSHINTS2001TAX

IRS

WELCOMETO TAXHINTS Looking back over the past three

years, we have made significantimprovements to our system of tax

administration. As a result of a great dealof effort, we�re in a far different situationtoday than we were last year or the yearbefore. To a considerable extent, thefoundation of the new IRS has been laid,and we must now take the next step andsuccessfully execute our plans for the2001 filing season.

One of our biggest goals for thiscoming filing season is to conduct most ofour internal and external transactionselectronically. To meet this objective, wemust make it not only technologicallypossible, but also attractive to the publicto make a permanent change from paperto electronic means. Toward that end, hereare some of the things we�re rolling outthis year and planning for the future.� For the 2001 filing season, we are

adding 23 additional forms to the 1040e-file program. We plan to roll out theremaining 40 forms and schedules for2002. This means we will open e-fileeligibility to 99.1 percent of all taxpay-ers, potentially adding 3.8 million newe-filers to the growing rolls.

� The IRS will eliminate the requirementfor a separate paper document with thee-file return. The IRS has successfullytested the use of a PIN code as thetaxpayer�s signature. With a fewexceptions, the 2001 filing seasonprogram will extend this option to alltaxpayers nationwide who will be ableto select their own PIN, then file

electronicallywithout anypaper. Inaddition, wehave a TaxpayerAuthorizationForm throughwhich taxpayerscan give anelectronic returnoriginator theauthority to entertheir PIN Code.

� This past filing season, more electronicpayments options were made available.These include accepting debit paymentsthrough TeleFile and accepting creditcards for Forms 1040ES, estimated taxpayments, and Forms 4868, extensionsof time to file. We will continue to offerthese options and build on these suc-cesses.

� We�re prototyping a secure messagingsystem that will provide participatingpractitioners with a Web-based meansfor resolving account-related issues.One of our major priorities is to build asecure infrastructure that will permitauthorized practitioners to exchangeinformation with the IRS through theInternet.

We have much to show for these threeyears. Although we can be proud of theseaccomplishments, we can�t be satisfied.The real work has just begun, and I�mconvinced that if we stay the course, wewill succeed. I wish you all the best for theupcoming filing season.

A message from the Commissionerof Internal Revenue

Charles O. RossottiCommissioner ofInternal Revenue

The IRS is changingto meet the de-mands of our

changing economy. In thisedition of TAX HINTS, youwill find some informationthat will help you navigatethe new IRS and antici-pate some of the issuesemerging for the 2001filing season.

This is the first elec-tronic newsletter forpractitioners that has beenproduced jointly by theIRS service centers andNational Headquarters.This document containsinformation about the newstructure of the IRS,including points ofcontact. It also explainschanges for the upcomingfiling season and offershints about how to make ita smooth one.

We hope the hints andsuggestions you find herewill make your job easier,and that experiences withIRS service centers will bepleasant and helpful toyou and your clients.

Department of the TreasuryInternal Revenue Servicewww.irs.gov/

http://www.irs.gov

22001 TAX HINTS

Practitioner�s Guide to Filing Season

The New IRS.........................2

What�s New for 2000.............7

Electronic Services...............13

e-file......................................15

Telephone organization.........18

Identification Numbers.........20

Fax-TIN................................22

Extensions............................23

Earned Income Credit..........24

Taxpayer Advocate Service..26

Power of Attorney................29

Refunds.................................30

Tax Return Transcripts........31

Estate & Gift Tax..................32

Underreporter...........................33

Statute of Limitations...........34

Estimated Taxes....................34

Penalty Abatement................35

Reasonable Cause.................37

Lockbox Addresses...............37

INSIDETHIS

ISSUE

What the modernizedIRS means to you

Continued on page 3

The IRSMission

Provide America�s taxpayerstop quality service by helpingthem understand and meet

their tax responsibilities and byapplying the tax law with

integrity and fairness to all.

IRSInternal Revenue Service

The IRS is undergoing the mostsignificant reorganization in itshistory, and the agency is

especially grateful for the support ithas received from the practitionercommunity since the beginning of themodernization effort.

Practitioners are a critical part ofthe tax system and are essential inproviding the IRS with insights andinput throughout the modernizationprocess. Practitioners are also majorcommunicators of the modernizationprogram not only to their clients, but toall taxpayers. The IRS values itsrelationships with tax professionalsand will work to enhance these rela-tionships in the future.

The current IRS structure estab-lished in 1952 succeeded in accom-plishing its purpose of administeringthe nations tax laws. Today, the IRScollects about $1.8 trillion in federaltaxes and has a voluntary compliancerate of approximately 98 percent.However, despite consistently fulfillingits purpose, the IRS has been thesubject of a great deal of study andcriticism in recent years. These studiesrevealed a wide range of problemsincluding inadequate technology, poorservice to taxpayers, violations oftaxpayer rights, lack of adequatetraining and resources and the inappro-priate use of enforcement statistics.

Beginning with the IRS Restructur-ing and Reform Act of 1998, andculminating with the stand-up of fournew operating divisions last year, theIRS has designed and implementedchanges that are intended to betterserve taxpayers. The central tenet ofmodernization lies in the belief that byunderstanding the taxpayer�s point ofview, the Service will be in a betterposition to collect the appropriateamount of tax while at the same time

more effectively using limitedresources. The cornerstone of thiseffort was the establishment of threestrategic goals. These goals are:� Service to each taxpayer.� Service to all taxpayers.� Increased productivity through a

quality work environment.

In order to implement these goals,the IRS has adopted five guidingprinciples. These principles are to:� Understand and solve problems

from the taxpayer�s point of view.� Enable managers to be account-

able.� Align measures of performance at

all organizational levels.� Foster open, honest communica-

tion.� Insist on total integrity.

Finally, the spirit of this effort isembodied by the new IRS missionstatement: �Provide America�staxpayers top quality service byhelping them understand and meettheir tax responsibilities and byapplying the tax law with integrityand fairness to all.�

One of the Service�s main objec-tives is to assist stakeholders andimprove the overall consistency andquality of stakeholder interactions.Over the last few months, the IRShas evaluated current relationshipswith external stakeholders across thecountry and has designated specificpoints of contact within the agencythat will be responsible for reachingout to them and maintaining openlines of communication during theupcoming filing season. These pointsof contact will include employeesfrom all four operating divisions, aswell as the commissioner�s represen-tatives in all 50 states, and will

32001 TAX HINTS


What the modernized IRS means to youContinued from page 2

IRS Leadership TeamView our organizational structureand find out whom to contact tolearn more about each IRSorganization. (www.irs.gov/bus_info/tax_pro/iod/1/index.html)

The IRS in your stateSee how the different servicesoffered by the IRS are distributedacross your state and learn whomto contact to meet your businessneeds. (www.irs.gov/bus_info/tax_pro/iod/2/index.html)

Small Business andSelf-EmployedContact points for taxpayersfiling Forms 1120S (S-corpora-tions); 1065 (partnerships), 1120(small corporations); 2106(business expenses); Schedule C(self-employed); Schedule E(rental real estate and royalties);Schedule F (farmers), estate andgift tax, fiduciary returns orinternational tax returns.(www.irs.gov/bus_info/tax_pro/iod/5/index.html)

Large & Mid-SizedBusinessContact points for taxpayersrequiring sophisticated taxplanning such as corporations,sub-chapter S corporations andpartnerships with assets greaterthan $5 million. (www.irs.gov/bus_info/tax_pro/iod/6/index.html)

Tax Exempt andGovernment EntitiesContacts points for questionsabout returns pertaining toEmployee Plans, Exempt Organi-zations and Government Entities. (www.irs.gov/bus_info/tax_pro/iod/7/index.html)

CONTACTING THENEW IRS

actively seek to develop preferredrelationships, meet stakeholder needsand provide stakeholders access to theIRS. The goal for the future is not onlyto maintain existing relationships but tobuild on them and ensure that theycontinue to grow.

This new strategy is called Relation-ship Management, and it takes customerservice to the next level. It is a type ofaccount management that emphasizes aproactive approach whereby IRSrelationship managers reach out tocustomers and get to know businessneeds and industry characteristics. Amajor part of the strategy is to providestakeholders with points of entry into theIRS � people they can call when theyneed assistance. The practitioner hotline(See page 19.) will remain in place, butefforts are underway to vastly improveaccess to all parts of the Service.Toward this end, the Service has devel-oped what promises to be one of themost useful communications toolsavailable to our stakeholders � aninteractive telephone directory of IRSmanagers and executives that is acces-sible on our Web site. This directoryprovides the names and numbers of keyIRS points-of-entry on a state-by-state

basis. Eventually, it will includenumbers for customer service andtaxpayer education and communica-tion staff for each operating division,as well as contact information forexecutives on the local, regional andnational levels.

The agency�s new mission re-quired a fundamental change in itsstructure. In the new IRS, taxpayerswill interact with four operatingdivisions (ODs) that will focus onthe specific needs of its customers.The ODs are: Wage and Investment(W&I), Small Business/Self-Em-ployed (SB/SE), Large and Mid-SizeBusiness (LMSB) and Tax Exempt/Government Entities (TE/GE).Additional components of the newstructure are the four functionaldivisions (FDs). The FDs will beresponsible for handling issuesagencywide and will provide supportand service to the ODs. The fourfunctional divisions are Appeals,Communications and Liaison,Criminal Investigation and theTaxpayer Advocate Service. Fordetailed information about the ODs,please see the At-a-Glance factsheets on the following pages.

The IRS is offering a new, dailyseries of Tax Tips for the 2001filing season.

IRS Tax Tips offer concise, usefulinformation on topics affecting millionsof taxpayers. These easy-to-read tipscover a wide range of topics, from childcredits and higher education benefits toIndividual Retirement Accounts andSocial Security issues.

Sample topics include:� Free tax help from the IRS.

� What to do if you can�t pay your tax.

� Education credits.

� Charitable contributions.

� Common errors.

� Mortage implications of alimonypayments.

More than 70 Tax Tips areavailable, a new one for eachbusiness day until the April taxdeadline. (One early tip � thisyear�s due date for returns is April16 because April 15 falls on aSunday.)

The Tax Tips are available at theIRS Web site at www.irs.gov underthe �IRS Newsstand� section or findthe tips by going directly towww.irs.gov/prod/news/tips.html

IRS offers Daily Tax Tips

http://www.irs.gov/bus_info/tax_pro/iod/1/index.html












http://www.irs.gov

http://www.irs.gov/prod/news/tips.html

42001 TAX HINTS


LMSB At-a-GlanceMission:The Large & Mid-Size BusinessOperating Division will be a worldclass organization responsive to theneeds of customers in a globalenvironment, while applyinginnovative approaches to customerservice and compliance. It willapply the tax law with integrityand fairness through a highlyskilled workforce, and will fosteran environment of inclusion whereeach employee can make a maxi-mum contribution to the mission ofthe team.

Strategic Priorities:� Globalization � Build a tax

administration to effectively dealwith the global economy.

� Issue Management � Develop astrategy to resolve disputessooner with taxpayers oreliminate controversy sooner inthe process.

� Employee Skills and Satisfac-tion � Recruit and retain ahighly qualified, skilled andsatisfied workforce.

� Abusive Corporate Tax Shelters� Strengthen our ability to dealwith corporate tax shelters.

Management Team:Larry R. Langdon

CommissionerDeborah M. Nolan

Deputy Commissioner

LMSB Headquarters Office:New Mint Building, 4th Floor

801 9th St. NWWashington, DC 20001

Carol DunahooDirector, International

Keith JonesDirector, Field Specialists

Arlene KayDirector, Quality Assurance and

Performance ManagementGerald Reese

Director, Prefiling and TechnicalGuidanceDick Teed

Deputy Director, Strategy, Researchand Program Planning

Susan LindenDirector, Communications & Liaison

Jim O�MalleyDirector, Management and Finance

Jim GaulDivision Information Officer

Julie RushinDirector, Business Systems Planning

JoAnne Johnson-ShawDirector, EEO & Diversity

Industry Operations:Retailers, Food and Pharmaceutical

Robert E. BrazzilIndustry Director

Downers Grove, ILRichard Goelz

Director, Field OperationsDowners Grove, ILKathy Petronchak

Director, Field OperationsLaguna Niguel, CA

Natural ResourcesBobby L. ScottIndustry Director

Houston, TXPaul Cordova

Director, Field OperationsHouston TX

Steve BurgessDirector, Field Operations

Springfield NJ

Financial Services & HealthcareDavid B. RobisonIndustry DirectorNew York, NY

Paul DeNardDirector, Field Operations

New York, NYMarsha Ramirez

Director, Field OperationsDowners Grove, IL

Mary TapleyDirector, Field Operations

Laguna Niguel, CA

Heavy Manufacturing, Construc-tion & Transportation

Thomas J. SmithIndustry DirectorSpringfield, NJ

Karen AmmonsDirector, Field Operations

Springfield, NJJack Schroeder

Director, Field OperationsDetroit, MI

Joe BrimacombeDirector, Field Operations

Laguna Niguel, CA

Communications, Technology &Media

Thomas R. Wilson, Jr.Industry Director

Oakland, CAJoann Bank

DirectorField Operations

Oakland, CACustomer Profile:� Corporations, Subchapter S

corporations and partnershipswith more than $5 million inassets.

� The largest business taxpayersinteract with the IRS on anongoing basis.

� Most have in-house tax divi-sions.

Major issues are tax law interpreta-tion, accounting and regulatoryissues. Many operate in a globalenvironment.

52001 TAX HINTS


SB/SE At-a-Glance

Mission:The mission of the SmallBusiness/Self-Employed (SB/SE) Operating Division is toprovide SB/SE customers top-quality service by educatingand informing them of their taxobligations, developing educa-tional products and services,and helping them understandand comply with applicablelaws, and to protect the publicinterest by applying the tax lawwith integrity and fairness toall.

Strategic Priorities:� Meet the public�s expecta-

tions by always being re-sponsive and always per-forming with integrity whendealing with customers.

� Recognize the need forcontinuous training, skillsenhancement and opencommunications betweenemployees and management.

� Encourage compliance bypartnering with the taxpayerfrom the �start-up� businessphase and throughout thebusiness life cycle.

� Stabilize and improvebusiness results.

Headquarters:New Carrollton, Maryland

Management Team:Joseph KehoeCommissioner

Dale HartDeputy Commissioner

Jerry SongyDirector, Taxpayer Education

and Communication

Bobby HuntDeputy Director, Taxpayer

Education and Communication

John ResslerDirector, Customer Account

Services

Brien DowningDeputy Director, Customer

Account Services

Glenn HendersonDirector, Compliance

Tom HullDeputy Director, Compliance

Chuck PetersonDirector, Strategy Program

Planning and Quality

Rob WilkersonDirector, Business Systems

Planning

Rich MorganteDirector, Management and

Finance

JoAnn InnisDirector, EEO and Diversity

Heather RosenkerDirector, Communications

Kevin BrownDivision Counsel (SB/SE)

Charles ValentinoDivision Information Officer

Area Headquarters Offices:Baltimore, Dallas, Jacksonville,Nashville, Seattle, Boston,Denver, Laguna Niguel, Philadel-phia, St. Paul, Chicago, Detroit,Manhattan, San Francisco Bayarea, Washington, Internationalarea office in Puerto Rico, FieldOffices throughout the nation

Taxpayer Profile:� Approximately 45 million

taxpayers.� About 33 million full or

partially self-employed.� About 7 million small

businesses with assets of $5million or less.

� Have some of the mostcomplex issues due to taxlaw requirements and thenumber of forms and sched-ules required.

� Have 4�60 routine transac-tions with the IRS per year

The SB/SE Operating Divi-sion will serve this taxpayersegment through three orga-nizations:� Taxpayer Education and

Communication (TEC): acustomer-focused organiza-tion that will continuouslyresearch and analyze tax-payer trends to ensure thatproducts and services aretailored to meet the needs ofSB/SE taxpayers.

� Customer Account Services(CAS): focus on processingreturns timely and accu-rately, assisting taxpayerswith account specific ques-tions and adjusting accountswhen necessary.

� Compliance: focus onproblem prevention andearly intervention to increaseoverall compliance andfairness by providing educa-tional guidance and outreachprograms focusing on smallbusiness needs.

62001 TAX HINTS


Mission: To provide TE/GE custom-ers top quality service by helpingthem understand and comply withapplicable tax laws and to protectthe public interest by applying thetax law with integrity and fairness toall.Strategic Priorities:� Ensure the accuracy of the

Exempt Organizations MasterFile.

� Address Employee Plans determi-nation workload.

� Establish Government Entitiesorganization and programs.

� Recruit, develop and retain ahighly qualified and skilledworkforce.

Headquarters:Washington, DC

Leadership Team:Evelyn A. Petschek

Commissioner

TE/GE At-a-Glance

W&I At-a-GlanceMission:

Wage and Investment OperatingDivision (W&I) will educate andassist our customers in understand-ing and satisfying their tax responsi-bilities. We will provide this servicein a high quality, fair and equitablemanner through partnership betweenmanagement, employees and stake-holders.Strategic Priorities:� Meeting demands for assistance

by providing better and morespecialized services to individualtaxpayers and emphasis oncustomer segment needs.

� Earlier and more accurate accountresolution through integrated caseprocessing and utilization oflinkages within the service.

� Implementing appropriate compli-

ance processes.� Improving electronic filing and

communications services.� Provide the W&I workforce with

the necessary tools for servicingtaxpayers and administering thetax code and enhance employeeskills through training.

Headquarters:Atlanta, Georgia

Management Team:John Dalrymple Commissioner

John DuderDeputy Commissioner

Linda StiffSenior Operations Advisor

Ty AyersDirector, Communications, Assis-

tance, Research and Education

Ron WatsonDirector, Customer Account Services

Jane WarrinerDirector, Compliance

Terry LutesDirector, Electronic Tax

AdministrationArea Headquarters Offices:Hartford, Indianapolis, St. Louis,Greensboro, New Orleans, SanFrancisco Bay area.

Taxpayer Profile:� Some 90 million filers, represent-

ing 116 million customers,including those who file jointly.

� Most pay taxes throughwithholdings and interact with theIRS once a yaer.

� More than half prepare their ownreturns and receive refunds.

organizations and municipalitiesto major universities, hugepension funds, state governmentsand complex tax exempt bonddeals.

� Pay more than $220 billion inemployment tax and income taxwithholding.

� Control $6.7 trillion in assets.� Employee Plans taxpayers

represent private and publicretirement plans with $4.1 trillionin assets.

� Exempt Organization taxpayersrepresent more than 1.5 milliontax exempt organizations, includ-ing 350,000 religious organiza-tions with $1.3 trillion in assets.

� Government Entities taxpayersinclude outstanding tax exemptbonds with a total value of $1.4trillion, 86,000 federal, state andlocal entities and more than 550federally recognized Indian tribes.

Darlene R. BerthodDeputy Commissioner

Carol D. GoldDirector, Employee Plans

Steven T. MillerDirector, Exempt Organizations

Edward J. WeilerDirector, Government Entities

John RickettsDirector, Customer Accounts Service

Steve PyrekDir., Communications & Liaison

Operating Units Headquarters:Headquarters, Washington, DCCustomer Account Services, Cincin-natiEP Exam Headquarters, BaltimoreEO Exam Headquarters, DallasGE Headquarters, Washington, DC

Customer Profile:� 3 million customers that range

from small local community

72001 TAX HINTS


What�s new for 2001Capital Gainsdistributions �Form 1040A� Beginning in 2000, certain capital

gain distributions can be reported online 10 of Form 1040A. Because ofthis change, there is a conflict withthe caution included in the instruc-tions on the back of Copy B of the2000 Form 1099-DIV. The cautiontells recipients if there is an amountin Box 2a (total capital gain distri-butions), they must file Form 1040and cannot use Form 1040A.However, because of the addition ofline 10 on the 2000 Form 1040A, arecipient of Form 1099-DIV with anamount in box 2a may be able to fileForm 1040A.

� The instructions for Form 1040Awill contain a Capital Gains TaxWorksheet to figure the tax. Theworksheet is similar to the one in the1999 Form 1040 instructions.

Deducting studentloan interestIf you paid interest on a qualifiedstudent loan, you may be able to deductup to $2,000 of the interest.

IRA deductionsYou may be able to take an IRAdeduction if you were covered by aretirement plan and your modifiedadjusted gross income is less than theamount shown below that applies toyou.� Single, head of household, or

married filing separately and youlived apart from your spouse for allof 2000 � $42,000

� Married filing jointly or qualifyingwidow(er) � $62,000.

Mailing returnsYou may be mailing returns to adifferent service center this yearbecause the IRS has changed the filinglocation for several areas. If yourclients receive an envelope with their

tax package, please use it. Otherwise,see Where Do You File? on the backcover of the instruction booklet or thechart on pages 9 and 10.

Standard mileage rateThe rate for business use of a vehicleduring 2000 is 321/

2 cents per mile.

Earned IncomeCredit (EIC)You may be able to take this credit ifyou earned income and modifiedadjusted gross income are less than$31,152 (less than $10,380 if you donot have any qualifying children).

Eligible foster childBeginning in tax year 2000, a child isan eligiblefosterchild forthe earnedincomecredit(EIC) andthe childtax creditif all thefollowing apply:1. The child is your brother, sister,

stepbrother or stepsister (or adescendant of your brother, sister,stepbrother or stepsister) or hasbeen placed with you by an autho-rized placement agency.

2. You cared for that child as youwould your own child.

3. The child lived with you for thewhole year, except for temporaryabsences.

Previously, the child only had to meet2. and 3. to be an eligible foster child.

Paid preparerauthorizationIf a taxpayer wants to allow the IRSto discuss their 2000 tax return withthe paid preparer who signed it, theymust check the Yes box in the signa-ture area of the return.

Enter all the requiredinformation to insurethe refund is credited

to the correct bank account.If an incorrect bank accountnumber and/or RoutingTransit Number (RTN) isentered by the taxpayer,preparer or electronic returnoriginator, the IRS does nothave the authority to recoverthe refund from the accountholder that receives the refundin error. Taxpayers mustcontact their financialinstitution to resolve theerroneous deposit.

Taxpayers will receive a paperrefund check and a notice if:

� Required information ismissing or incomplete.

� RTN does not match themaster list of valid RTNs.

� RTN is for a foreign bank.

� Power of Attorney is on fileand third party is autho-rized to receive refund.

� Return is a decedent return.

� Return is for a prior year.

� $10,000 or more in with-holding and zero tax isowed.

� Math error of more than$50.

� More than two directdeposits are requested forthe same account.

DIRECTDEPOSIT OF

REFUNDS

82001 TAX HINTS


Some taxpayers will startsending their returns to adifferent address beginning

with the 2001 filing season as theInternal Revenue Service (IRS)reorganizes its service center opera-tions to focus on specific customersegments.

Taxpayers and their representativeswill continue to contact the IRS in thesame ways they do now. (See the listof Practitioner Hotline telephonenumbers by state on page 19.) Also,taxpayers may continue to call anyIRS toll-free number to get theiraccount information. The call willautomatically be routed to the IRSoffice responsible for providing theinformation.

In 2001, taxpayers should sendtheir returns to the service centerwhose address is printed on theenvelope in their tax package, listed inthe instructions for each type of returnor contained in the software used toprepare their electronic returns.

In the past, the 10 service centersreceived and processed tax andinformation returns, managed tax-payer accounts and conducted simpleaudits through correspondence andother enforcement actions. The IRSassigned these activities to a specificcenter based on the taxpayer�sgeographic location, without regardfor the type of return.

As part of the modernizationprocess, these activities will beassigned to a center based on twofactors:� Whether the return is an individual

or business return.� The taxpayer�s geographic loca-

tion.

This move allows the servicecenters to build experience in theirparticular customer segments and toimprove the quality of work and the

service delivered to taxpayers.When the transition is completed in the

2002 filing season, eight centers �Andover, Atlanta, Austin, Brookhaven,Fresno, Kansas City, Memphis andPhiladelphia � will handle only thereceipt and processing of individualreturns (Forms 1040, 1040A 1040EZand Forms 4868 and 2888, extensions).Cincinnati and Odgen will handle onlythe receipt and processing of businessreturns. Business returns include employ-ment, estate and gift tax returns (Forms706, 709, 940/940 EZ, 941/943/945,1041, 1065, 1120 and 7004).

For the 2001 filing season, individualsin 12 states and businesses in 16 stateswill be affected. The following year,individual taxpayers in an additional 13states and business taxpayers in anadditional 18 states will be affected. Atthat point, all business filers will besending their returns to either the Ogdenor Cincinnati centers. Please refer to thefollowing charts for a listing of affectedstates. Additional information is avail-able on the IRS Web site atwww.irs.gov/bus_info/tax_pro/index.html.

Service center transitionchanges filing locations

CREDITCARD

PAYMENTOPTIONS

Taxpayers who chargepayments made with

automatic extensions oftime to file or estimatedtax payments on a credit

card should not filepaper Forms 4868 or

1040-ES.

The first-evergovernment Web site toprovide the public witheasy, one-stop access to

all U.S. governmentresources.

Make checks payable toUnited States Treasury �

not the IRS.

REMEMBER:

Get answers to all themost frequently asked questions

aboutTax Year 2000 at

www.irs.gov/tax_edu/faq/index.html

H I N T S2001TAXH I N T S2001TAX

TAX HINTS was produced withassistance from many sources,including employees in theOperating and FunctionalDivisions, as well as the taxprofessional community.Thanks to all who contributedand special thanks to theAustin Service Center Com-munications staff who contrib-uted to the development andproduction of this document.

http://www.irs.gov/bus_info/tax_pro/index.html


http://firstgov.gov/

http://www.irs.gov/tax_edu/faq/index.html

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SERVICE CENTER FILING LOCATIONS BY STATE

940/940EZ, 941/943/945 1040, 1040A, 1040EZ 706/709 1041, 1065, 1120, 7004

STATE OF TAXPAYER 2000 2001 2000 2001 2000 2001

Alabama Memphis Memphis Memphis Memphis Memphis Memphis

Alaska Ogden Fresno Ogden Ogden Ogden Ogden

Arizona Ogden Ogden Ogden Ogden Ogden Ogden

Arkansas Memphis Memphis Memphis Cincinnati Memphis Ogden

California (except Sac) Fresno Fresno Fresno Fresno Fresno Fresno

California (only Sac) Ogden Ogden Ogden Ogden Ogden Ogden

Colorado Ogden Austin Ogden Ogden Ogden Ogden

Connecticut Andover Andover Andover Andover Andover Andover

Delaware Philadelphia Brookhaven Philadelphia Cincinnati Philadelphia Cincinnati

Florida Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta

Georgia Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta

Hawaii Fresno Fresno Fresno Cincinnati Fresno Ogden

Idaho Ogden Austin Ogden Ogden Ogden Ogden

Illinois Kansas City Kansas City Kansas City Kansas City Kansas City Kansas City

Indiana Cincinnati Philadelphia Cincinnati Cincinnati Cincinnati Cincinnati

Iowa Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden

Kansas Austin Kansas City Austin Austin Austin Austin

Kentucky Cincinnati Memphis Cincinnati Cincinnati Cincinnati Cincinnati

Louisiana Memphis Memphis Memphis Cincinnati Memphis Ogden

Maine Andover Andover Andover Andover Andover Andover

Maryland Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati

Massachusetts Andover Andover Andover Andover Andover Andover

Michigan Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati

Minnesota Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden

Mississippi Memphis Memphis Memphis Cincinnati Memphis Ogden

Missouri Kansas City Kansas City Kansas City Cincinnati Kansas City Ogden

Montana Ogden Austin Ogden Ogden Ogden Ogden

10

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SERVICE CENTER FILING LOCATIONS BY STATE

940/940EZ, 941/943/945 1040, 1040A, 1040EZ 706/709 1041, 1065, 1120, 7004

STATE OF TAXPAYER 2000 2001 2000 2001 2000 2001

Nebraska Ogden Memphis Ogden Ogden Ogden Ogden

Nevada Ogden Ogden Ogden Ogden Ogden Ogden

New Hampshire Andover Andover Andover Andover Andover Andover

New Jersey Brookhaven Brookhaven Brookhaven Cincinnati Brookhaven Cincinnati

New Mexico Austin Austin Austin Austin Austin Austin

New York (Albany, Buffalo) Andover Andover Andover Andover Andover Andover

New York (Brklyn, Manh) Brookhaven Brookhaven Brookhaven Brookhaven Brookhaven Brookhaven

North Carolina Memphis Memphis Memphis Cincinnati Memphis Cincinnati

North Dakota Ogden Ogden Ogden Ogden Ogden Ogden

Ohio Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati Cincinnati

Oklahoma Austin Austin Austin Austin Austin Austin

Oregon Ogden Kansas City Ogden Ogden Ogden Ogden

Pennsylvania Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati

Rhode Island Andover Andover Andover Andover Andover Andover

South Carolina Atlanta Atlanta Atlanta Cincinnati Atlanta Cincinnati

South Dakota Ogden Ogden Ogden Ogden Ogden Ogden

Tennessee Memphis Memphis Memphis Memphis Memphis Memphis

Texas Austin Austin Austin Cincinnati Austin Ogden

Utah Ogden Ogden Ogden Ogden Ogden Ogden

Vermont Andover Andover Andover Andover Andover Andover

Virginia Philadelphia Philadelphia Philadelphia Philadelphia Philadelphia Philadelphia

Washington Ogden Ogden Ogden Ogden Ogden Ogden

Washington, DC Philadelphia Philadelphia Philadelphia Cincinnati Philadelphia Cincinnati

West Virginia Cincinnati Atlanta Cincinnati Cincinnati Cincinnati Cincinnati

Wisconsin Kansas City Kansas City Kansas City Cincinnati Kansas City Cincinnati

Wyoming Ogden Austin Ogden Ogden Ogden Ogden

112001 TAX HINTS


What�s new for 2001

Beginning Jan. 1, 2001, manysmall businesses will be allowedto make employment tax pay-

ments on a quarterly basis instead ofmaking monthly deposits.

Under the new rules, the IRS willallow businesses that file Forms 941 tomake payments every three months ifthey have less than $2,500 in quarterlyemployment taxes. It replaces the currentstandard, which allows quarterly pay-ments only if businesses have less than$1,000 in quarterly employment taxes.Small businesses above the new thresh-old must make payments on a monthlybasis.

The difference between the $1,000 and$2,500 thresholds affects paymentrequirements for about 1 million busi-nesses. In all, these businesses deposit

IRS simplifies tax deposit rules for smallbusiness

$6.6 billion, about 13 percent of the$52.7 billion in total employment taxdeposits.

One way small businesses willbenefit from this change is thatquarterly deposits greatly reduce theirburden of making frequent monthlydeposits.

Small businesses with employmenttaxes that are less than $2,500 perquarter may pay the employment taxeswhen they file Form 941, Employer�sQuarterly Federal Tax Return. Onlyemployers with employment taxes of$2,500 or more per quarter mustdeposit the tax with an authorizedfinancial institution. Form 943 filersmay pay with the return if the taxesare less than $2,500 per calendar year.

The IRS has created a new Websection for taxpayers seekinginformation about their rights

when dealing with the nation�s taxagency. The Taxpayer Rights Corner canbe accessed at www.irs.gov/ind_info/txpyr_rights/index.html

The new page is designed to be aneasy, one-stop shop that brings a varietyof taxpayer rights issues into oneconvenient place. Previously, much ofthe material was located in differentparts of the IRS Web site. The topicsincluded on the page range from basictaxpayer information to detailed steps onhow to get help from the IRS. You couldfind it useful as a quick reference tool, oryou could refer your clients to the pagefor detailed explanations of their rights.The Web page reflects the agency�scontinuing commitment to safeguardingtaxpayer rights.

New Taxpayer Rights Corner on the Web

Among the areas highlighted on theWeb page:� Know Your Rights spells out basic

taxpayer rights.� The notice section gives quick links

to understanding IRS notices.� For examination and collection

issues, the Taxpayer Rights Cornerconnects to publications detailingstep-by-step IRS processes.

� If taxpayers have a disagreementwith the IRS, information is avail-able in the Appeal Rights section.

� Taxpayers with difficulty solvingtheir problems through normal IRSchannels can contact the TaxpayerAdvocate Service.

� The site also has information onquestions involving legal representa-tion and confidentiality privileges.

For processing year 2001(tax year 2000), the IRSwill generally accept an

electronically filed return witha Self-Select PIN even thoughthere is not an exact match onthe date of birth (DOB).However, returns e-filedthrough the On-line FilingProgram must still have anexact DOB match, whether ornot they include a Self-SelectPIN.

The DOB field on allelectronically filed returnsusing the Self-Select PIN for e-file will be verified. If the DOBdoes not match, but all otherrequirements are met, thereturn will not be rejected.

An indicator on the Ac-knowledgment File will identifyif the primary, secondary orboth taxpayers have invaliddates of birth. These taxpayersneed to be advised to contactthe Social Security Administra-tion to have their recordsverified and corrected asnecessary prior to the 2002filing season.

The Acknowledgment Keyrecord will contain the follow-ing on accepted and rejectedreturns.

Date of Birth Validity Code(Field 0117) values:0 DOB validation not required1 DOB(s) valid2 Primary DOB Invalid3 Spouse DOB Invalid4 Both DOBs Invalid

Processing for Reject Codes673 and 674 will be bypassed.

DATE OF BIRTHVALIDATION

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122001 TAX HINTS


Florida, Georgia, South Carolina,West Virginia

Delaware, New Jersey, New York (NewYork City and Counties of Nassau,Rockland, Suffolk, and Westchester)

New York (all other counties),Connecticut, Maine, Massachusetts, NewHampshire, Rhode Island, Vermont

Illinois, Iowa, Kansas, Minnesota,Missouri, Oregon, Wisconsin

District of Columbia, Indiana, Maryland,Pennsylvania, Virginia

Michigan, Ohio

Colorado, Idaho, Montana, New Mexico,Oklahoma, Texas, Wyoming

Arizona, California (counties of Alpine,Amador, Butte, Calaveras, Colusa,Contra Costa, Del Norte, El Dorado,Glenn, Humboldt, Lake, Lassen, Marin,Mendocino, Modoc, Napa, Nevada, Placer,Plumas, Sacramento, San Joaquin, Shasta,Sierra, Siskiyou, Solano, Sonoma, Sutter,Tehama, Trinity, Yolo, and Yuba), Nevada,North Dakota, South Dakota, Utah,Washington

California (all other counties), Alaska,Hawaii

Alabama, Arkansas, Kentucky, Louisiana,Mississippi, Nebraska, North Carolina,Tennessee

All APO and FPO addresses, AmericanSamoa, nonpermanent residents of Guamor the Virgin Islands*, Puerto Rico (or ifexcluding income under IRC section 933),a foreign country: U.S. citizens and thosefiling Form 2555, 2555-EZ, or 4563

Atlanta, GA39901-0002

Holtsville, NY00501-0002

Andover, MA05501-0002

Kansas City, MO64999-0002

Philadelphia, PA19255-0002

Cincinnati, OH45999-0002

Austin, TX73301-0002

Ogden, UT84201-0002

Fresno, CA93888-0002

Memphis, TN37501-0002

Philadelphia, PA19255-0215 USA

P.O. Box 105093Atlanta, GA 30348-5093

P.O. Box 1187Newark, NJ 07101-1187

P.O. Box 371361Pittsburgh, PA 15250-7361

P.O. Box 970011St. Louis, MO 63197-0011

P.O. Box 8530Philadelphia, PA 19162-8530

P.O. Box 6223Chicago, IL 60680-6223

P.O. Box 970016St. Louis, MO 63197-0016

P.O. Box 7704San Francisco, CA 94120-7704

P.O. Box 60000Los Angeles, CA 90060-6000

P.O. Box 1214Charlotte, NC 28201-1214

P.O. Box 7328Philadelphia, PA 19162-7328

* Permanent residents of Guam should use: Department of Revenue and Taxation, Government ofGuam, P.O. Box 23607, GMF, GU 96921; permanent residents of the Virgin Islands should use: V.I.Bureau of Internal Revenue, 9601 Estate Thomas, Charlotte Amalie, St. Thomas, VI 00802

For practitioner-prepared returns: Where to file2000 Forms 1040, 1040A and 1040EZ only

If your client lives in: Without payment With payment

The IRS willno longer

accept paperreturns in the

1040PCformat

Beginning in the2001 processingyear, the IRS will

no longer accept returns inthe 1040PC format.

The Form 1040PC is acondensed, computer-generated paper returnillustrating only thoselines used by a taxpayer.This discontinuationparallels the IRS�sdecision to supportElectronic Tax Adminis-tration as the preferredway of doing business forthe future, particularlyelectronic filing (e-file)and payment options forindividual taxpayers. Theavailability of IRS e-filefrom a personal computerand the addition of morecomplex returns to theIRS e-file program havefurther reduced the needfor the Form 1040PCformat.

Taxpayers and taxpreparers accustomed tothe Form 1040PC formatshould note that this paperfiling option will not existfor the 2001 filing seasonand instead are encour-aged to consider IRS e-file� the fastest, mostaccurate way to file!

132001 TAX HINTS


As digital communication becomesmore and more a part of ourlives, the IRS continues to come

up with new and improved ways to usenew technology to make life easier fortaxpayers and tax preparers.

The Tax Professional�s Corner(www.irs.gov/bus_info/tax_pro/index.html) is designed to help practitio-ners find what they need on the IRS Website. The site has fill-in-the-blank formsas well as forms to download and print.There is also a W-4 calculator to helptaxpayers determine the number ofexemptions to take.

IRS Local News NetThe latest communications tool from

the IRS is the Local News Net � anoffshoot of the very successful DigitalDispatch, which delivers IRS news ofnational importance directly to e-mailsubscribers. The Local News Net is anelectronic news system designed toprovide its subscribers with up-to-the-minute local news. Each IRS office,Submission Processing, CustomerService and Accounts Management centerhas personalized it�s own Local NewsNet and has its own subscription list. Thecenters issue periodic alerts to theirsubscribers about filing processes,changes in tax law and updates to phonenumbers, addresses, etc.

All you need is Internet access and ane-mail address to subscribe. Click onwww.irs.gov/bus_info/tax_pro/where_list/index.html and click on thestate you want information from.

To subscribe to the Digital Dispatchfor national news, visit the IRS Web siteat www.irs.gov/help/newmail/maillist.html.

We strongly urge you to subscribe toboth of these services.

Tax forms on CD-ROMPublication 1796, Federal Tax Prod-

ucts CD-ROM, contains fill-in-the-blank

tax forms, portions of the InternalRevenue Manual, market segment guidesand tools for the tax professional.

Pub. 1796 can be purchased from theNational Technical Information Service(NTIS) for $21 through the IRS Website at www.irs.gov/cdorders or bycalling 1.877.233.6767 for $21 (plus $5handling fee).

Order your Package Xon-line

Tax professionals can electronicallyupdate their order for Package X,Reference Copies of Federal Tax Formsand Instructions, at the Tax Profession-als Corner at www.irs.gov/bus_info/tax_pro/index.html.

Only current participants can use thismethod by using their account numbershown on the mailing label of Pub. 1045.If you have an address change or are anew participant in the program, youmust submit a paper Form 3975, TaxProfessionals Annual Mailing ListApplication and Order Blank, to thenearest IRS Area Distribution Center aslisted on the form. Form 3975 can befound in Publication 1045.

Electronic paymentoptions for individuals

Electronic payment options �direct debit (electronic with-drawal from checking or savings

account) or credit card � are conve-nient, safe and secure methods forpaying individual income taxes and givetaxpayers an alternative to paying taxesby check or money order.

Taxpayers may file Form 1040 seriesbalance due returns or Forms 4868,Application for Automatic Extension ofTime to File U.S. Individual Income TaxReturn, electronically and simulta-neously pay by direct debit or credit cardvia tax preparation software or a tax

IRS electronicinformation services

The Interactive Organi-zational Directory isa tool that gives

taxpayers and practitionersthe ability to obtain tele-phone contact informationabout the IRS executive whois best positioned to givethem assistance. For ex-ample, to contact the SB/SEterritory manager in Mil-waukee, practitioners andtaxpayers can now just lookthem up through the IRS�Web page. Information onboth headquarters and fieldcontacts is now immediatelyavailable through thedirectory, located on the TaxProfessionals Corner in theIRS� Digital Daily atwww.irs.gov/prod/bus_info/tax_pro/iod.

In the near future, thisdirectory will become amuch more prominentfeature in the IRS� overallInternet strategy. It will belinked to IRS� main em-ployee, stakeholder andorganization databaseswhere it will give taxpayersaccess to real time informa-tion on IRS employees andcontacts. The new systemwill be completely auto-mated and will thereforeadjust to changes in tele-phone numbers and organi-zation structure as it evolves.

ON-LINEDIRECTORY

Continued on page 14



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142001 TAX HINTS



professional. A taxpayer also may e-file a tax return and pay by creditcard via phone or the Internetthrough a service provider.

Taxpayers may e-file their Form1040 and Form 1040-ES, EstimatedTax for Individuals, and simulta-neously pay by direct debit via taxpreparation software or a taxprofessional. They may also make aForm 1040-ES payment by creditcard via phone or the Internetthrough a service provider.

Making a payment electronicallyeliminates the need to send in thepaper Form 1040-V, Form 4868 orForm 1040-ES. Payments must be atleast $1. Payments for prior taxyears are not accepted at this time.

When canelectronic paymentsbe made?� Form 1040 series � including

Forms 1040A, 1040EZ, 1040 andTeleFile users � payment optionsbegin Jan. 12, 2001 and end Oct.15, 2001.

� Form 4868 payment options,except TeleFile, begin Jan. 12,2001 and end April 16, 2001.

� The TeleFile direct debit paymentoption begins April 1, 2001 andends April 16, 2001. Form 4868payments made through TeleFilewill be effective on April 16,2001.

� Form 1040-ES direct debitpayment option begins January12, 2001. Taxpayers can chooseone of the following paymenteffective dates: April 16, June 15or Sept. 17, 2001. The credit cardpayment option begins March 1,2001 and ends Jan. 23, 2002.

� Payments can be made 24 hours aday, seven days a week.

If a taxpayerchooses to payusing direct debit� The taxpayer authorizes the U.S.

Department of the Treasury(through a Treasury FinancialAgent) to transfer money fromtheir bank account to the Treasuryaccount.

� Funds are automatically with-drawn on the payment dateselected. However, if a weekendor bank holiday is designated, thepayment will not be withdrawnuntil the next business day.

� Direct debit payments will bewithdrawn in a single transaction,not installments.

Cancellations, errorsand questions� Taxpayers can call the Treasury

Financial Agent at1.888.353.4537 toll free to cancela payment or to report problemssuch as bank closures, lost orstolen bank account numbers,closed bank accounts or unautho-rized transactions.

� Once the IRS e-file return isaccepted, the scheduled paymentdate cannot be changed. If thedate needs to be changed, the onlyoption is to cancel the paymenttransaction and choose anotherpayment method (credit card,check or money order).

� Scheduled payments can becancelled up to 8:00 p.m. EasternTime two business days before thescheduled payment date.

� The cancellation must be autho-rized by the taxpayer or by aperson with access to thetaxpayer's Social Security Num-ber, payment amount and bankaccount number.

� Taxpayers can also call the abovenumber to inquire about paymentsthrough Oct. 17, 2001. Taxpayersshould wait at least five days afterthe e-file return is accepted before

making inquiries.� Taxpayers will be notified if a

payment is returned by thefinancial institution due to insuffi-cient funds, incorrect accountinformation, closed accounts, etc.If this occurs, the IRS will send anotification letter to the address onthe tax return explaining why thepayment could not be processed.The letter will include instructionsfor sending a check to a uniqueaddress that has been establishedfor this initiative.

� In the event the financial institu-tion is unable to process thetransaction, the taxpayer will beresponsible for the tax paymentand for any penalties and interest.

� Contact the IRS immediately at1.800.829.1040 if there is an errorin the amount withdrawn.

� In the event Treasury causes anincorrect amount of funds to bewithdrawn from the bank account,Treasury is responsible forreturning any improperly trans-ferred funds.

How to make acredit card payment� The e-file and credit card option is

available through a number of taxpreparation software packagesand through tax professionals. Formore information about e-filingand paying all at once (includingconvenience fees and acceptedcredit cards), taxpayers can referto tax preparation software or atax professional.

� Pay-by-phone and Internet optionsare available through credit cardpayment service providers.

� When paying by phone, a re-corded script will guide taxpayersthrough the call.

� When paying by Internet, taxpay-ers will be prompted to fill in thenecessary entry fields.

� For more information about

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152001 TAX HINTS




paying by phone or Internet and/orto make a payment, taxpayers cancontact the following serviceproviders:� Official Payments Corporation

1.800.2PAY.TAX®(1.800.272.9829)1.877.754.4413 (CustomerService)www.officialpayments.com

� PhoneCharge, Inc.1.888.ALL.TAXX(1.888.255.8299)1.877.851.9964 (CustomerService)www.About1888ALLTAXX.com

� Taxpayers can pay by phone orthe Internet using a Discover®Card, American Express® Cardor MasterCard®.

� To make a payment of$100,000 or greater through theOfficial Payments Corporation,taxpayers can call thecompany�s Special ServicesUnit at 1.877.754.4420.

Credit cardconvenience fees� There is a convenience fee

charged by the service providers.� Fees are based on the amount of

the tax payment and may vary byservice provider.

� The IRS does not receive orcharge any fees for payments.

� Taxpayers will be informed of theconvenience fee amount before thepayment is authorized. This fee isin addition to any charges, such asinterest, that may be assessed bythe credit card issuer.

If a taxpayerchooses to payusing a credit card� Payments must be made electroni-

cally through tax preparationsoftware, a tax professional or acredit card payment serviceprovider (via phone or the

Internet). Credit cards should notbe sent to the IRS with the returnnor should credit card accountnumbers be written on the return.

� The processors will forward theappropriate tax payment informa-tion to the IRS.

� The payment date will be the datethe charge is authorized.

� Partial payments can be made byphone or Internet. A maximum oftwo payments per tax type (or perquarter if making estimatedpayments) can be made by phoneor Internet.

� Some tax preparation softwaremay not allow taxpayers to makepartial payments.

� Taxpayers who e-file and payshould re-file rejected returnspromptly in order to ensure timelypayment. Otherwise, the paymentmay have to be reauthorized.

Cancellations,errors andquestions� Generally, credit card payments

cannot be cancelled.� Taxpayers can call the credit card

issuer or credit card paymentservice provider�s customerservice number to report problems

such as unauthorized charges orconcerns about payment errors.

� Taxpayers can contact the IRS at1.800.829.1040 to report prob-lems with the amount of tax owedor any other matter concerning thetax return.

� Taxpayers may also write to theIRS office where the return wouldbe mailed regarding income taxpayment concerns. The taxpayer�sSocial Security Number, paymenttax year and payment methodshould be included.

� In the event the service providerfails to forward the tax paymentto the Treasury, the taxpayer willbe responsible for the tax paymentand for any penalties and interest.

� Voluntary or estimated payments,such as Form 4868 and Form1040ES payments, which result inan overpayment will be resolvedthrough normal administrativeprocedures.

� In most instances, Treasury willrefund an overpayment to taxpay-ers once the return is received andprocessed. An overpayment maybe used to settle or offset anexisting debt on the taxpayer�saccount.

IRS e-file is a way for taxprofessionals to electronicallyfile a client�s tax return directly

to IRS computers. It�s the perfectway toincreasebusinessandprovideadditionalcustomerservice to an existing client base.This year, the IRS will once againprovide all tax professionals whobecome Authorized IRS e-fileProviders with an IRS e-file Market-ing Tool Kit containing materials

that will be helpful in promoting IRSe-file services.

All tax professionals who becomeproviders automatically become a

part oftheAutho-rized IRSe-fileProvider

Database, an on-line application thatallows taxpayers and tax profession-als to search for providers via zipcode. If you want to go a step furtherand electronically file federal and

e-file ensures high quality

http://www.officialpayments.com

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162001 TAX HINTS


Continued from page 15ElectronicFederal Tax

PaymentSystem

EFTPS is the easiestway for businesses tomake their federal tax

payments. EFTPS was createdby the Department of theTreasury in 1995 to modernizetax payments � movingfederal tax payments from apaper-based to an electronicsystem.

More than 2 million busi-ness taxpayers are enrolled inEFTPS. They know the realvalue of paying their taxeselectronically. If you haven�texperienced the many benefitsof EFTPS, now�s the time.You will find that EFTPS is:� Easy to use from any-

where � with a phone orPC and modem or througha program offered by yourfinancial institution.

� Convenient � schedulepayments 24 hours a day,seven days a week.

� Accurate � you verify allthe information you input toensure accuracy.

� Fast and economical � ittakes less than four min-utes, and you�ll have nomore last-minute trips tothe bank or to the store forstamps or envelopes.

Anyone may participate inEFTPS, but they must enrollin the program. For enrollmentforms or more information,call 1.800.945.8400 or1.800.555.4477 or check theWeb site: www.irs.gov/elec_svs/eftps.html. Enroll-ment forms are not availableat IRS offices or banks.

state returns simultaneously, Federal/State e-file may be the perfect additionto your portfolio of business services.

Ready to apply? See Publication3112, IRS e-file Application Package(on-line at www.irs.gov/elec_svs/efile-app.html) or call or e-mail your localIRS e-file contact for assistance.

IRS e-file � the fastest, most accu-rate way to file your taxes!

What�s new for 2001The new Revenue Procedure, 2000-

31, informs Authorized IRS e-fileproviders of their obligations whenparticipating in IRS e-file of individualincome tax returns. It includes substan-tive changes to the rules for participa-tion and the definitions of participants.Many of the rules previously prescribedin Revenue Procedures 98-50 and 98-51have been moved to Publications 1345and 3112, which also have been revised.Participants should become familiarwith the rules for participation byreading the new Revenue Procedure andthe related IRS e-file technical publica-tions.

For the 2001 filing season, there is anew feature, Self-Select PIN for e-file,which is a direct product of both thePractitioner PIN Pilot and the e-fileCustomer Number (ECN) pilot. TheSelf-Select PIN for e-file will be avail-able for most taxpayers who file elec-tronically using tax preparation softwareeither by filing through an on-line filingcompany or by filing through a taxprofessional.

Direct DebitThe direct debit payment option has

been expanded. Your client can e-file areturn and authorize a direct debitpayment for the balance due on theirreturn. Whether there is a balance due ornot, an estimated payment (Form 1040-ES) can be initiated when the return ise-filed. Your clients can also make apayment by direct debit when Form4868 is filed electronically or throughTeleFile.

Also, there are now two pay-by-phone credit card payment serviceproviders. Your client can also pay byInternet using a credit card throughthese service providers.

If your client is unable to pay thetotal tax owed by April 16, 2001, youcan electronically file Form 9465,Installment Agreement Request. Anapproved installment agreement allowsyour client to make a predeterminedseries of partial payments after April16, 2001. However, any unpaid taxowed after April 16, 2001, is subject topenalties and interest.

What is the Self-Select PIN for e-file?

The Self-Select PIN for e-file is newfor filing season 2001. It allowstaxpayers to electronically sign their e-filed return by selecting a five-digitPersonal Identification Number (PIN).It eliminates the requirement for Form8453 in most cases, making e-filingreturns truly paperless for mosttaxpayers.

Who can use the Self-Select PIN for e-file?

Self-Select PIN for e-file is availablefor most taxpayers. The followingtaxpayers are eligible to use the Self-Select PIN for e-file:

� Taxpayers who filed Form 1040,1040A or 1040EZ for tax year 1999.

� Taxpayers who did not file for taxyear 1999, but have filed previously.

� Taxpayers who are 16 or older on orbefore Dec. 31, 2000, who havenever filed a tax return.

� Military personnel residing overseaswith APO/FPO addresses.

� Taxpayers residing in the Americanpossessions of the Virgin Islands,Puerto Rico, American Samoa,Guam and Northern Marianas orwith foreign country addresses.

� Taxpayers filing a Form 2688(additional extension of time to file)or Form 2350 (certain U.S. citizensliving abroad).


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172001 TAX HINTS


products to taxpayers entitled to indi-vidual income tax refunds. The agree-ments cover not only the firm thatsigned the agreement but also relatedproviders and financial institutions thatdo electronic filing business with thefirm. For example, if a transmittersigned an agreement, all ElectronicReturn Originators (EROs) who use thattransmitter are covered by the agree-ment. Providers that did not presentproposals to the original RFA or are notcovered under one of the announcedagreements may still apply to obtain theDI for the upcoming filing season underan amendment to the RFA.

In return for the DI, covered Autho-rized IRS e-file Providers and financialinstitutions agreed to screen returns andreturn information available to them inthe normal course of their business forpotential fraud and abuse and reporttheir findings to the IRS.

Other Authorized IRS e-file Providersand financial institutions that do elec-tronic filing business with any of theannounced firms may already qualify toobtain the DI for their taxpayers even ifthey did not submit a proposal. Theannounced firm�s agreement will coverthem as long as they commit to theterms of the agreement. Contact the firmfor more information.

A Memorandum of Agreement thatresults from the original RFA or theapplication process is covered bySection 18 of Revenue Procedure 98-50(IRS e-file) or Section 15 of RevenueProcedure 98-51 (On-Line Filing).

Returns for the following taxpayersare not eligible for using the Self-SelectPIN for e-file:� Decedents.� Legal or illegal aliens with Social

Security Numbers not valid foremployment.

Your clients must furnish the follow-ing information to secure their PIN:� The Adjusted Gross Income and

Total Tax from their 1999 return(prior to any adjustments).

� If your client did not file a return fortax year 1999, enter zero �0� as theamount for Adjusted Gross Incomeand Total Tax.

If your client isunable to return toyour office to inputtheir Self-Select PIN

Your client may authorize you toinput their Self-Selected PIN bycompleting an IRS e-file SignatureAuthorization. Provide the SignatureAuthorization to the taxpayer alongwith a copy of the completed tax return,either personally or by mail. Instructyour client to review the tax return foraccuracy and complete the SignatureAuthorization by providing the re-quested information (a self-selectedfive-digit PIN, pen and ink signatureand date). If your client is unable toreturn the signed document to youroffice, they may return it by mail orfax. It is not necessary for both taxpay-ers e-filing a joint return to select thisoption.

Importantannouncement aboutthe Debt Indicator

The IRS has negotiated agreementsto provide a Debt Indicator (DI) in the2001 filing season to Authorized IRS e-file Providers in response to proposalssubmitted under the Request for Agree-ments (RFA) process. The DI is impor-tant to Authorized IRS e-file Providersand financial institutions that offer bank

Find out how to contact yourlocal e-file coordinator atwww.irs.gov/elec_svs/eta-

coord.html

Contact your locale-file coordinator

� Submit Form 8633,Application to Participatein the Electronic FilingProgram.

� Apply early. It takes up to60 days to process appli-cations, which are ac-cepted only from Aug. 1through Dec. 1.

� Forms 8633 are processedat the Andover SubmissionProcessing Center. Formore information about e-file or the name and phonenumber of the e-filecoordinator in your area,call 1.800.691.1894.

For the latest information one-file, check out The DigitalDaily at www.irs.gov/elec_svs/elf-txpro.html.

APPLYING TOPARTICIPATE

IN E-FILE

FORMS 8453/8453OL

It is no longer necessaryto submit Forms W-2

and 1099R with Forms8453/8453OL, but Forms

8453/8453OL must besubmitted unless the

taxpayer qualifies to usethe Self-Select PIN.

If you are an e-filer,your software shouldinclude an electronic

version of Form 8867 orfacsimile.

You may keep informa-tion that is required tobe kept for three years

in electronic files.

NOTE:


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182001 TAX HINTS


IRS centralized telephoneorganization

The IRS� centralized telephoneorganization, the Joint Opera-tions Center, is located in

Atlanta. The mission of the JointOperations Center is to provide tollfree telephone customers optimumaccess to the resource best able tomeet their needs for toll free phonelines.

The latest technology is used tomonitor the status of call traffic on anationwide basis. The system providesboth initial call routing for eachincoming call and post-routing of callsbased on customer topic selections.Post routing enables customers to berouted to assistors with the skillsneeded to answer their questions withthe least amount of wait time.

IRS toll-freenumbers

Tax Law Assistance1.800.829.1040

Get assistance with tax questions, 24hours a day, seven days a week.

Automated Refund Information1.800.829.4477

Current year refund information isavailable 24 hours a day, seven daysa week. Wait at least four weeks afterfiling a return before calling to checkon the status of a refund to allow forprocessing.

Recorded Tax Information1.800.829.4477

Hear recorded information on taxsubjects such as earned incomecredit, child care credit, credit for theelderly, dependents, innocent spouserelief or other topics such as elec-tronic filing, which form to use, orwhat to do if you can�t pay your taxes.

Account Questions1.800.829.8815

IRS Notices or Letters1.800 number printed on notice or

letterIf you call the toll-free number on thenotice or letter, have the latest noticeor letter available and the Power ofAttorney (CAF identification number)information ready if you are callingfor the taxpayer.

Forms and Publications1.800.829.3676

For free copies of current and prioryear forms, instructions and publica-tions. Order should arrive within 10days.

Appeals1.877.457.5055

For help with questions when prepar-ing an appeal of an IRS Collection orExamination matter.

Taxpayer Advocate1.877.777.4778

For help in resolving a problem thathasn�t been resolved by prior contactswith the IRS.

Informants Line1.800.829.0433

Hearing Impaired Taxpayers1.800.829.4059

For tax assistance help.

NEW

NEW

THEDIGITALDAILY

www.irs.gov� Download forms

and publications.

� Ask tax-relatedquestions.

� Read summaries oftax regulations inplain English.

� Read newsreleases.

� Send your com-ments directly tothe IRS on-line.

� Download statis-tics of incomedatabase.

� Learn aboutelectronicservices.

� Use the W-4calculator to figurewithholding allow-ances.

� Visit the TaxProfessional�sCorner forpractitioners.

� Subscribe to theDigital Dispatch �an e-mailnewsletter or theLocal News Net.

http://www.irs.gov

192001 TAX HINTS


State Phone HoursNumber Local Time

Alabama 205.912.5150 8:30 a.m.-4:30 p.m.

Alaska 206.220.5786 8:00 a.m.-5:30 p.m.

Arizona 602.207.8828 8:00 a.m.-4:30 p.m.

Arkansas 405.297.4141 8:00 a.m.-4:30 p.m.

California 949.389.4618 8:00 a.m.-4:30 p.m.510.444.4906 8:00 a.m.-5:30 p.m.510.444.4972 8:00 a.m.-5:30 p.m.510.271.0781 8:00 a.m.-5:30 p.m.213.576.4532 8:00 a.m.-4:15 p.m.559.452.4210 8:00 a.m.-3:30 p.m.

Colorado 303.820.3940 8:00 a.m.-4:30 p.m.

Connecticut 860.756.4476 8:00 a.m.-4:30 p.m.

DC 410.727.7965 7:30 a.m.-4:30 p.m.

Delaware 302.573.6421 7:30 a.m.-4:30 p.m.

Florida 954.423.7763 8:00 a.m.-4:15 p.m.904.399.5531 8:15 a.m.-4:00 p.m.305.982.5242 8:00 a.m.-4:15 p.m.678.530.7799 8:00 a.m.-4:00 p.m.206.220.5786 8:00 a.m.-5:30 p.m.

Idaho 303.820.3940 8:00 a.m.-4:30 p.m.

Illinois 312.435.1110 8:00 a.m.-4:30 p.m.

Indiana 317.377.0027 8:00 a.m.-5:00 p.m.

Iowa 314.342.9325 8:00 a.m.-4:30 p.m.

Kansas 314.342.9325 8:00 a.m.-4:30 p.m.

Kentucky 502.582.5284 8:00 a.m.-5:00 p.m.

Louisiana 504.558.3050 8:00 a.m.-4:30 p.m.

Maine 617.720.4147 8:00 a.m.-4:30 p.m.

Maryland 410.727.7965 7:30 a.m.-4:30 p.m.

Massachusetts 617.720.4147 8:00 a.m.-4:30 p.m.

Michigan 313.628.3870 8:00 a.m.-4:30 p.m.

Minnesota 314.342.9325 8:00 a.m.-4:30 p.m.

Mississippi 601.292.4944 8:00 a.m.-4:30 p.m.

Missouri 314.342.9325 8:00 a.m.-4:30 p.m.

Montana 303.820.3940 8:00 a.m.-4:30 p.m.

2001 Filing Season Practitioner Hotline Numbers

State Phone HoursNumber Local Time

Nebraska 314.342.9325 8:00 a.m.-4:30 p.m.

Nevada 602.207.8828 8:00 a.m.-4:30 p.m.

New Hampshire 617.720.4147 8:00 a.m.-4:30 p.m.

New Jersey 973.921.4052 8:00 a.m.-4:30 p.m.

New Mexico 602.207.8828 8:00 a.m.-4:30 p.m.

New York 518.427.4228 8:00 a.m.-4:30 p.m.631.447.4960 8:00 a.m.-3:00 p.m.718.488.2250 8:00 a.m.-4:30 p.m.716.961.5151 8:15 a.m.-4:15 p.m.212.719.8281 9:30 a.m.-4:30 p.m.

North Carolina 336.378.2157 8:00 a.m.-4:30 p.m.

North Dakota 314.342.9325 8:00 a.m.-4:30 p.m.

Ohio 513.263.3349 8:00 a.m.-4:30 p.m.216.623.1338 8:30 a.m.-4:30 p.m.

Oklahoma 405.297.4141 8:00 a.m.-4:30 p.m.

Oregon 503.222.7562 7:30 a.m.-5:30 p.m.

Pennsylvania 412.281.0281 7:00 a.m.-4:30 p.m.

Rhode Island 401.525.4113 8:00 a.m.-4:30 p.m.

South Carolina 803.253.3231 7:30 a.m.-4:15 p.m.

South Dakota 314.342.9325 8:00 a.m.-4:30 p.m.

Tennessee 615.781.4826 8:00 a.m.-4:45 p.m.901.546.4213 8:00 a.m.-4:30 p.m.

Texas 214.767.1501 7:00 a.m.-10:00 p.m.281.721.7640 7:00 a.m.-10:00 p.m.512.464.3337 7:00 a.m.-10:00 p.m.

Utah 303.820.3940 8:00 a.m.-4:30 p.m.801.620.6339 8:00 a.m.-4:30 p.m.

Vermont 617.720.4147 8:00 a.m.-4:30 p.m.

Virginia 804.698.5010 8:30 a.m.-4:30 p.m.

Washington 206.220.5786 8:00 a.m.-5:30 p.m.

West Virginia 804.698.5010 8:00 a.m.-5:30 p.m.

Wisconsin 314.342.9325 8:00 a.m.-4:30 p.m.

Wyoming 303.820.3940 8:00 a.m.-4:30 p.m.

202001 TAX HINTS


The names and SocialSecurity Numbers (SSNs) of

everyone claimed on a taxreturn � primary, second-ary and all dependent SSNs� must exactly match the

names on their Social Secu-rity card. In the past, the

IRS has not accepted elec-tronic returns with any

name/number mismatch,whether for the taxpayer, the

spouse, or a dependent. Ithas also reduced tax benefits

claimed on paper returnswhen there was a name/

number mismatch for thefirst spouse listed on a jointreturn or for any dependent.

This year, the IRS will dothe same for both spouses on

a paper filed joint return.People who change their

surnames for any reason �such as marriage � shouldget updated identification

cards, unless they intend touse the former name for

legal purposes. Form SS-5,Application for a Social

Security Card, is availablefrom the SSA Web site at

www.ssa.gov, or by calling(toll free) 1.800.772.1213.

SECONDARYSSN

VALIDATION

Refund checks will bereturned to the IRS if the

address on the check is notcurrent. Advise your clientsto file Form 8822, Change of

Address, when they move.

Individual Taxpayer IdentificationNumbers (ITINs) are used for taxpurposes only and do not replace

SSNs. ITIN recipients are not eligiblefor the Earned Income Credit (EIC).ITINs are permanent tax identificationnumbers and replace the former IRStemporary numbers (ISRNs). Conse-quently, the IRS no longer acceptsIRSNs or entries such as applied for,NRA or SSA205C on tax documents andreturns. Because the ITIN must beapplied for and assigned prior to filing atax return, ITIN applied for in the SSNfield on a tax form is not a valid entryeither.

Those taxpayers eligible for ITINsinclude resident and nonresident alienswho are:� Required to file a U.S. tax return,� Claimed as a dependent of a U.S.

person on a tax return,� The spouse of a U.S. citizen who files

a joint return,� Claimed as a spousal exemption on a

U.S. tax return,� Filing a U.S. tax return solely for a

refund claim or� Nonresidents filing a U.S. tax return

to claim a treaty benefit.Those not eligible for ITINs are U.S.

citizens and U.S. resident aliens who areeligible to receive SSNs.

File a Form W-7 with the supportingdocumentation described below to applyfor an ITIN. The revised Form W-7reflects taxpayer feedback and is easierto understand and complete. A Spanishversion, Form W-7SP, is also available.

Forms W-7 may be submitted byseveral methods:� Individuals can present the completed

Form W-7 and supporting documenta-tion at any IRS Taxpayer AssistanceCenter in the U.S. and abroad. AnIRS reviewer will examine thematerial and return the documentationto the applicant. The Form W-7 is

Individual TaxpayerIdentification Numbers (ITIN)

then certified by the reviewing officeand forwarded to the PhiladelphiaIRS Campus (PIRSC) for process-ing. An ITIN notice containing thenumber is generated during process-ing and is mailed directly to theapplicant.

� Applicants may also mail theircompleted Forms W-7 directly to thePIRSC with the required documenta-tion. These applicants also receivetheir ITINs directly from the PIRSCthrough the mail.

� Applicants may use the services ofan Acceptance Agent who is autho-rized to certify Forms W-7 for theIRS and review applicants� docu-mentation. Acceptance Agents aretax practitioners and other qualify-ing agents, such as educationalinstitutions and government agen-cies, who file the certified Forms W-7 on behalf of the applicants, receivethe assigned ITINs from the PIRSCand notify their clients of the as-signed ITINs.Acceptable documentation is defined

as documentation that proves bothidentity and foreign status. When asingle document satisfies both require-ments (such as a passport), one proofwill suffice; otherwise, two types ofdocumentation are required. Types ofacceptable documentation include:� Passports� Visas� National identity cards� Drivers� licenses

Original documentation received bythe PIRSC ITIN Unit is reviewed foracceptance or rejection within 14 daysand returned to the applicant throughthe U.S. Postal Service (documentsreturned to international addresses aresent by registered mail). In lieu oforiginal documents, applicants mayalso submit quality copies of docu-


REMINDER

http://www.ssa.gov

212001 TAX HINTS


Individual Taxpayer Identification NumbersContinued from page 20

Adoption Identification Numbers(ATINs) are for taxpayers whoare in the process of adopting a

child and who meet the criteria forclaiming dependent status for the adop-tive child but are unable to apply for aSSN for the child, pending final adop-tion.

Note: ATINs are issued for domesticadoptions only. Taxpayers involved ininternational adoption must apply foran ITIN for the child.

ATINs are temporary numbers issuedby the IRS and are valid only for a 2-year period or until the applicant receivesan SSN for the adoptive child. Manyadopting parents often have custody ofthe child for a period of time pending theadoption and provide sufficient financialsupport during the year to claim thedependency exemption or child carecredit on their returns. However, becauseof privacy issues, they do not have accessto the child�s existing SSN. Additionally,because the Social Security Administra-tion (SSA) will only issue an SSN whenthe adoption is final, the parents are

Adoption Identification Numbersunable to provide an SSN when filingthe return.

Note: Earned Income Credit(EIC) is not allowed without a validSSN issued by the SSA; therefore,the EIC cannot be claimed when anATIN is used for the child. Afteradoption is final and the taxpayerhas obtained a valid SSN for theadoptive child, the parents may filean amended return to claim the EICfor the period of pending adoption,provided all other EIC criteria aremet.

Form W-7A is used by taxpayers toapply for ATINs. As with ITINs,applicants will be required to providesupporting documentation with theapplication. Applicants may file FormW-7A at all IRS district offices andposts of duty where field personnelwill verify the information and pre-screen the Form W-7A for accuracyand completeness.

Applicants may also mail the FormW-7A and supporting documentationto the ITIN Unit.

ments that have either been certified bythe issuing agency or notarized by a U.S.Notary.

Note: If the documentation is in aforeign language, a certified translationmust accompany it.

Applications and supporting documen-tation that are rejected will be returned tothe applicant with a detailed explanationfor the rejection and what additionalinformation is needed.

More information about ITINs can beobtained from Pub. 1915, UnderstandingYour Individual Taxpayer IdentificationNumber.

For more information on the Accep-tance Agent Program and how to apply

for Acceptance Agent status, taxpractitioners can contact the IRSOffice of Pre-Filing and TechnicalGuidance at 1.202.874.1800.

Forms W-7 and documentation canbe mailed to:Philadelphia IRS CampusITIN Unit PO Box 447, DP 2840Bensalem, PA 19020

The ITIN Unit Customer Servicephone number is 215.516.4846. TheITIN Unit fax number is:215.516.3270.

Note: Processing Forms W-7 andissuance of the assigned ITINs maytake four to six weeks from receipt.

The Practitioner Identifi-cation Number (PTIN)program began in 1999

to address concerns that apreparer�s SSN could be usedinappropriately by clients andothers having access to aprepared return.

Preparers may downloadForm W-7P, Application forPreparer Tax IdentificationNumber, from the �TaxProfessional�s Corner� on theIRS Web site at www.irs.govor by calling the IRS toll�freetax forms line at1.800.829.3676.

To ensure that the personassigned to and identified by aspecific PTIN is the personapplying for it, the applicationform asks for the preparer�sname, home address, date ofbirth and SSN.

The PTIN is the identifyingnumber of only the individualrequesting it and has norelation to firms employing taxreturn preparers. Preparersmay continue to use theirPTINs year after year withoutreapplying. Preparers must useeither their SSN or a PTIN.Do not write PTIN applied forin the Paid Preparer�s UseOnly section of the return.(Preparers are advised toconsult with their respectivestates regarding the use of aPTIN on state tax returns.)

Mail or fax Forms W�7P to:Philadelphia IRS CampusPTIN UnitP.O. Box 447, DP 2840Bensalem, PA 19020

The PTIN customer servicenumber is 215.516.4846. Thefax number is 215.516.1127.

PTINPROGRAM

http://www.irs.gov

222001 TAX HINTS


Taxpayers can request EmployerIdentification Numbers (EINs)by fax through the Fax-TIN

Program. They should first complete aForm SS-4 and then fax it to theappropriate center. (See fax numbersat left.) The faxnumber is avail-able 24 hours aday. Undermostcircum-stances,the IRSwillassign anEIN withinfour work-days. Be sureto provide us with your fax number sowe can fax the EIN.

Fax-TIN is the safest, easiest andmost accurate method of obtaining anEIN, but in an emergency you mayalso request an EIN by phone. Ourresources allow us to have a limitednumber of people available to answerthe phone, so we can better serve youif you fax us the EIN request.

If you must telephone us, completeForm SS-4 and then call us anyweekday between the hours of 7:30a.m. and 5:00 p.m. (See phone num-bers at left.) The EIN will be assignedimmediately, but you must still mailthe completed Form SS-4 to us within24 hours. (Be sure the Form SS-4 iscompletely filled out and signed by aduly authorized person. Keep a copyfor your records.)

EIN disclosure lawsThe Fax-TIN/Tele-TIN function is

limited by strict disclosure laws, andan EIN can be given out to a dulyauthorized person only. A dulyauthorized person for the followingtypes of organization is:� Sole proprietorship � owner.

� Corporation � president, vice-

Fax-TIN: EINs by faxpresident or other principal officer.

� Partnership � a partner.

� Estate or trust � administrator,executor, fiduciary or trustee.

� Other unincorporated organizations �a responsible and duly authorized

member or officer of theorganization.

Remember,a third partymust haveproperwritten

authorizationsuch as a Form 2848,

Power of Attorney andDeclaration of Representative, before

newly assigned EINs can be released tothem. (See page 29 for Form 2848information.)

The guidelines for sole proprietorshipEINs are now more stringent. TheseEINs are issued primarily to individualswho have employees (or file any otherfederal returns or documents); individu-als who issue Forms 1099 for contractlabor; or those who are required to havean EIN by the Bureau of Alcohol,Firearms and Tobacco.

AndoverTele-TIN: 978.474.9717Fax-TIN: 978.474.9774

AtlantaTele-TIN: 770.455.2360Fax-TIN: 678.530.6156

AustinTele-TIN: 512.460.7843Fax-TIN: 512.460.8000

BrookhavenTele-TIN: 631.447.4955Fax-TIN: 631.447.4991

CincinnatiTele-TIN: 859.292.5467Fax-TIN: 859.292.5760

FresnoTele-TIN: 559.452.4010Fax-TIN: 559.443.6961

Kansas CityTele-TIN: 816.823.7777Fax-TIN: 816.823.7776

MemphisFax-TIN only: 901.546.3916

OgdenFax-TIN only: 801.620.7115

Problems: 801.620.6339

PhiladelphiaTele-TIN: 215.516.6999Fax-TIN: 215.516.3990

FAX-TIN

AND

TELE-TINNUMBERS

� Taxpayer faxes Form SS-4 andthen calls Tele-TIN to request anEIN. This could cause duplicateEINs to be issued.

� Form SS-4 is not completelyfilled out.

� Taxpayer is uncertain about thetype of entity being established.

� Callers sometimes are unable toestablish that they are authorizedto request an EIN for the entitythey represent. An EIN can bereleased only to duly authorizedindividuals.

COMMON FAX-TINPROBLEMS

232001 TAX HINTS


If you file multiple Forms 4868 or2688, be sure to complete Item 3,the explanation of why the exten-

sion is needed, for each form. Do notwrite a single cover letter of explana-tion for multiple forms. Be sure towrite SSNs or EINs on all extensionsand installment agreement requests.

If you submit a Form 4868 or Form2688 with a copy to be date stampedand returned, include a preaddressedenvelope to expedite the process.

There are four extension forms forreturns other than the 1040 series, andthey are not interchangeable. Be sureto use the correct one.� Form 8868: extensions for various

types of Forms 990 and 990-Texempt organization returns, Form1041-A and Form 5277 (if requiredto be filed by the trustee of a trust)

Avoid extension problemsand other returns related to exemptorganizations.

� Form 8736: extensions for Forms1065 and 1066 and Form 1041,when it is used for a trust.

� Form 7004: extensions for Forms1120 and 990T.

� Form 2758: extensions for avariety of excise tax, income tax,information returns and otherreturns, including Form 1041 whenit is filed for an estate.

Be sure to check one of the boxesnear the top of the form to indicate thetype of return for which you arerequesting an extension. Blanketextensions are not granted. Separateforms must be filed for each return.

Taxpayers who file extensions byApril 16 but are unable to paythe full amount will not be

penalized if they pay 90 percent of thetotal tax due at the time they requestthe extension. Regulations require thatthe tax liability reported on Form4868, Application for AutomaticExtension of Time to File U.S. Indi-vidual Income Tax Return, be properlyestimated based on available informa-tion. The extension may be disallowedand a late filing penalty assessed if thetaxpayer does not properly estimate thetax due and attach it to the request.Form 4868 is in voucher form againthis year and can be sent electronically.Balance due Forms 4868 should besent to the appropriate lockbox. (Seepages 38 and 39.)

If a client cannot pay the taxes owedat the time of filing of the return, youcan file a Form 9465, InstallmentAgreement Request, with the taxreturn. This form allows the taxpayer

to request a monthly payment planspecifying the monthly payments.

There is a processing fee of $43 forentering into an installment agreementand $24 for restructuring or reinstatingan installment agreement. Do not sendthe $43 when you send the Install-ment Agreement Request. We willsend you a notice for the fee once theagreement has been approved. Form9465 can be transmitted electronicallyby itself or accompanying an electroni-cally filed return.

Attach Form 9465 to the front of thereturn so it can be detached andprocessed separately. Attach Forms W-2, W2- G and 1099R separately sothey will not be inadvertently detachedwith the Form 9465. If you havealready filed the return or are filing thisform in response to a notice, File Form9465 by itself with the IRS servicecenter where you filed your income taxreturn.

Extensions and Installment Agreements

If returns are not assembledin attachment sequence,they must be pulled apart

and reassembled. Although wetake care to reattach all thepages, important documenta-tion could get lost in theprocess.

Form 9465, InstallmentAgreement Request, and Form911, Application for TaxpayerAssistance Order to RelieveHardship, should be attachedto the front of the return.Attach other forms andschedules at the end of thereturn in order of the Attach-ment Sequence Number that isshown below the year in theupper right corner of the formor schedule. AttachmentSequence Numbers are not inthe same order as form num-bers. For example, Form 8801has Attachment Sequence No.74 and Form 8814 has Attach-ment Sequence No. 40.

IRS forms and scheduleswithout attachment sequencenumbers follow next innumerical order. Attachseparate statements at the endof the return � not betweenforms and schedules that arein sequence. If these relate toprevious correspondence, referto the IRS customer servicerepresentative by name, IDnumber and mail stop number,where possible. Copies ofapproved extensions of time tofile should be attachedfollowing the IRS forms.

ASSEMBLEFORMS INPROPERORDER


242001 TAX HINTS


Earned Income Credit


New definition ofeligible foster child

Congress has redefined eligiblefoster child for purposes of theearned income credit (EIC)

and the child tax credit (CTC). Thenew definition appears in section 412 ofthe Ticket to Work and Work IncentivesImprovement Act of 1999. For tax yearsafter 1999, a child is an eligible fosterchild if all the following apply:1. The child is the taxpayer's brother,

sister, stepbrother, stepsister (or adescendant of the taxpayer's brother,sister, stepbrother or stepsister), or achild placed with the taxpayer by anauthorized placement agency. Anauthorized placement agency is anagency of a state, political subdivi-sion or tax-exempt child placementagency licensed by the state.

2. The taxpayer cared for the child asthe taxpayer would care for his or herown child.

3. The child lived with the taxpayer forthe entire year, except for temporaryabsences. (A child who was born ordied during the year is considered tohave lived with the taxpayer for theentire year, if the child lived with thetaxpayer for the entire time the childwas alive during the year.)Before tax year 2000, the child had to

meet only the second and third require-ments above to be the taxpayer's eligiblefoster child.Note: The IRS has free eligible fosterchild posters for you to display in youroffice. They are available in English(Pub. 3709) and in Spanish (Pub.3709SP) from the IRS forms distribu-tion centers. To order, call toll free1.800.829.3676.

Some things have notchangedRules for all taxpayers

To claim the EIC, the taxpayer (andspouse, if filing a joint return) musthave a valid Social Security Number

(SSN) issued by the Social SecurityAdministration (SSA). If the SocialSecurity card says Not Valid forEmployment, however, the taxpayercannot claim the EIC if the number wasissued so that the taxpayer could receivea federally funded benefit, such asMedicaid. If the taxpayer has a cardwith this legend and the taxpayer'simmigration status has changed so thatthe taxpayer is now a U.S. citizen orpermanent resident, the taxpayer shouldrequest that the SSA issue him or her anew Social Security card without thelegend. Individual Taxpayer Identifica-tion Numbers (ITINs) issued by the IRSto aliens who cannot get an SSN cannotbe used to claim the EIC.

To claim the EIC, the taxpayer mustmeet the following requirements:� The taxpayer's filing status cannot be

Married Filing Separately.� The taxpayer must be a U.S. citizen

or resident alien. An exception existsfor a nonresident alien who (1) ismarried to a U.S. citizen or residentalien, and (2) chooses to be treated asa resident for the entire year by filinga joint return.

� The taxpayer cannot file Form 2555or Form 2555-EZ, relating to foreignearned income.

� The taxpayer's investment incomemust be $2,400 or less.

� The taxpayer (and spouse, if filing ajoint return) cannot be the qualifyingchild of another person.

Requirements for a qualifying child.To be a qualifying child, a child must

meet three the following three tests:� Age� Residency� Relationship

You can find specific details for thesethree tests in Publication 596, EarnedIncome Credit; the instructions forForms 1040 and 1040A; and theSchedule EIC instructions.

EITC ONTHE WEB

PROPERASSEMBLYOF RETURNPACKAGE


(Ignore the sequence numberon Form 2688.) Attach theremittance to the front of thereturn on top of Form W-2.� Secure the return package

with one staple in the topleft corner. Use binder clipsor large rubber bands forlarge documents. Do not usetape.

� Keep the upper right portionof the front page blank andfree of staples. The Docu-ment Locator Number(DLN) is printed in thatarea. A staple can cause theDLN to be printed illegiblyand can even damage theimprinting equipment. Somepractitioners stamp or printa message such as �IRSFile Copy� in that area inlarge letters which obscurethe DLN.

� Do not use binders orplastic covers; these mustbe removed for processingand are discarded.

� Do not staple the envelope.

Go directly to EarnedIncome Tax Creditinformation on the

Digital Daily:www.irs.gov/eitc

http://www.irs.gov/eitc

252001 TAX HINTS


Continued from page 24Earned Income Credit

In addition, the child must have avalid Social Security Number. (Seethe first paragraph under rules forall taxpayers above.)

Basic rules for persons with aqualifying child:� The taxpayer's earned income and

modified adjusted gross income(AGI) must both be less than$27,413 if the taxpayer has onequalifying child, and $31,152 ifthe taxpayer has more than onequalifying child. For 2000, themaximum credit is $2,353 if thetaxpayer has one qualifying child,and $3,888 if the taxpayer hasmore than one qualifying child.

� The taxpayer's qualifying childcannot be the qualifying child ofanother person with a highermodified AGI.

Basic rules for persons without aqualifying child:� The taxpayer's earned income and

modified adjusted gross income(AGI) must both be less than$10,380. The maximum credit for2000 is $353.

� The taxpayer (or spouse, if filinga joint return) must be at least age25, but under age 65 at the end ofthe year.

� The taxpayer (and spouse, if filinga joint return) cannot be eligible tobe claimed as a dependent onanyone else's return.

� The taxpayer (and spouse, if filinga joint return) must have lived inthe United States more than halfof the year. Members of themilitary on extended active dutyoutside the United States areconsidered to live in the UnitedStates during that duty period.

Disallowance of the EICIf the IRS disallowed or reduced

the taxpayer's EIC for a year after1996 for any reason other than a

mathematical or clerical error, thetaxpayer may need to file Form8862, Information To Claim EarnedIncome Credit After Disallowance,with his or her 2000 tax return.Form 8862 must be attached to thefirst return on which the taxpayerclaims the EIC filed (either on paperor electronically) after the EIC wasdisallowed or reduced for the earlieryear. If the taxpayer claims the EICand a required Form 8862 is notattached, the EIC will be disallowedunder the mathematical and clericalerror procedures.

If, in addition to a denial orreduction of the taxpayer's EIC, itwas determined that the taxpayer'sEIC claim was due to reckless orintentional disregard of the EICrules, the taxpayer would have beennotified that he or she is ineligible toclaim the EIC for the following 2years (for a fraudulent claim, theperiod is 10 years). (See chapter 5 ofPublication 596 for details.)

And last but notleast, Due Diligence

On Oct. 17, 2000, the IRS issuedTD 8905, which contains finalregulations pertaining to due dili-gence requirements for paidpreparers of EIC returns. The finalregulations adopt the proposedregulations, TD 8798, which wereissued on Dec. 21, 1998, along withtemporary regulations.

EIC due diligence has applied toall returns prepared by paidpreparers beginning with the 1997tax year. For 1997, temporary rulesappeared in Notice 97-65. As one ofthe four due diligence requirements,preparers were required to completea checklist attached to Notice 97-65.For 1998, preparers were required tofollow the rules in the temporaryregulations and to complete either the

checklist in Notice 97-65 or the newForm 8867, Paid Preparer's EarnedIncome Credit Checklist. For 1999and subsequent years, preparers arerequired to use Form 8867, not thechecklist in Notice 97-65.

Due diligence requirementsTo satisfy the due diligence require-ments, you must:� Complete Form 8867 (or your

own checklist, which may beelectronic, as long as it providesthe same information as Form8867).

� Complete the appropriate EICworksheet in the Form 1040,1040A or 1040EZ instructions orin Pub. 596 (or your ownworksheet, which may be elec-tronic, as long as it provides thesame information as the appropri-ate worksheet). The worksheets inthe instructions and the publica-tion vary. For example, either ofthe worksheets in Pub. 596 can beused by taxpayers filing Form1040A, but the worksheet in theinstructions for Form 1040Acannot be used by taxpayersrequired to use Pub. 596.

� Have no knowledge that any of theinformation used to determine thetaxpayer's eligibility for, or theamount of, the EIC is incorrect.

� Keep the following information,either on paper or electronically,for 3 years after the June 30thfollowing the date you gave thereturn to the taxpayer for his orher signature:

� Form 8867 (or your own check-list),

� The EIC worksheet (or your ownworksheet), and

� A record of how, when and fromwhom you obtained the informa-tion used to prepare the checklist.

262001 TAX HINTS


The Taxpayer Advocate Serviceis an IRS program thatprovides an independent

system to assure that tax problemsthat have not been resolved throughnormal channels are promptly andfairly handled. The program isheaded by the national taxpayeradvocate. Each state and servicecenter has at least one local taxpayeradvocate, who is independent of thelocal IRS office and reports directlyto the national taxpayer advocate.

The goals of the Taxpayer Advo-cate Service are to protect individualtaxpayer rights and to reduce tax-payer burden. The taxpayer advocateindependently represents yourinterests and concerns within the IRS.This is accomplished in two ways:� Ensuring that taxpayer problems

that have not been resolvedthrough normal channels arepromptly and fairly handled.

� Identifying issues that increaseburden or create problems fortaxpayers: bringing those issues tothe attention of IRS managementand making legislative proposalswhere necessary.

Who may use theTaxpayer AdvocateProgram?

If you have a an ongoing issue withthe IRS that has not been resolvedthrough normal processes, or youhave suffered, or are about to suffer,a significant hardship as a result ofthe application of the tax laws,contact the taxpayer advocate.

Generally, the taxpayer advocatecan help if, as a result of the applica-tion of the tax laws, you:� Are suffering, or are about to

suffer, a significant hardship;

� Are facing an immediate threat ofadverse action;

� Will incur significant cost (includ-

ing fees for professional represen-tation);

� Will suffer irreparable injury orlong-term adverse impact;

� Have experienced a delay of morethan 30 days to resolve the issue;or

� Have not received a response orresolution by the date promised.

Additionally, you may contact thetaxpayer advocate if all establishedsystems or procedures have failed tooperate as intended to resolve theproblem or dispute.

Hardship situations and otherissues that are referred to the tax-payer advocate are reviewed on theindividual merits of each case.

The Taxpayer Advocate Service isnot a substitute for established IRSprocedures or the formal Appealsprocess. The advocate cannot reverselegal or technical tax determinations.

How do I reach aTaxpayer Advocate?� Call the telephone number listed

for the office closest to you or theoffice with which you have beendealing. (See next page.)

� Call the Taxpayer Advocate�s toll-free telephone number:1.877.777.4778

� Call the general IRS toll-freenumber (1.800.829.1040) and askfor Taxpayer Advocate assistance.

� Write the office nearest you or theone you have been dealing with.(See next page for addresses.)

� TTY/TTD help is available bycalling: 1.800.829.4059.

� Check the Taxpayer Advocate Website at www.irs.gov/ind_info/advocate.html

or

� File Form 911, Application for aTaxpayer Assistance Order,

� Send a written request forassistance (if Form 911 is notavailable), or

� Request that an IRS employeecomplete a Form 911 on yourbehalf (in person or over thephone).

You may fax a Form 911 (orwritten request) to your localtaxpayer advocate. Form 911 isavailable by calling the IRS forms-only number, 1.800.829.3676 or atthe IRS Web page: www.irs.gov.An Application for a TaxpayerAssistance Order requires theadvocate to determine if significanthardship exists and to review thecase to determine what actionshould be taken to relieve thehardship. In certain situations,enforcement action may be sus-pended while a case is beingreviewed.

The majority of cases areresolved administratively by thetaxpayer advocate. Even whenhardship is not a factor, the advo-cate is often able to help resolve thetaxpayer�s problem.

What can I expectfrom the TaxpayerAdvocate?

The taxpayer advocate will listento your point of view and will workwith you to address your concerns.You can expect the advocate toprovide you with:� A fresh look at your problem,

� Timely acknowledgment,

� The name and phone number ofthe individual assigned to yourcase,

� Updates on progress,

� Time frames for action,

� Speedy resolution, and

� Courteous service.

Taxpayer Advocate Service

http://www.irs.gov/ind_info/advocate.html

http://www.irs.gov/ind_info/advocate.html

http://www.irs.gov

272001 TAX HINTS


ALABAMABirmingham Office801 Tom Martin Dr.

Room 150-PRBirmingham, AL 35211

205.912.5631

ALASKAAnchorage Office949 East 36th Ave.

Stop A-405Anchorage, AK 99508

907.271.6877

ARIZONAPhoenix Office

210 E. Earll DriveStop 1005-PX

Phoenix, AZ 85012602.207.8240

ARKANSASLittle Rock Office

700 West Capitol St.Stop 1005-LIT

Little Rock, AR 72201501.324.6269

CALIFORNIALaguna Niguel Office

24000 Avila RoadRoom 3362

Laguna Niguel, CA 92677949.389.4804

Los Angeles Office300 N. Los Angeles St.

Stop1005-LA Room 5119Los Angeles, CA 90012

213.576.3199

Oakland Office1301 Clay St. # 1540S

Oakland, CA 94612510.637.2703

Sacramento Office4330 Watt Ave.

N. Highlands, CA 95660916.974.5007

San Jose Office55 S. Market St.Stop HQ000-4

San Jose, CA 95113408.817.6850

COLORADODenver Office

600 17th St.Stop 1005-DEN

Denver, CO 80202.2490303.446.1012

CONNECTICUTHartford Office

135 High St.Stop 219

Hartford, CT 06103860.756.4555

DELAWAREWilmington Office409 Silverside Rd.

Wilmington, DE 19809302.791.4502

DISTRICT OF COLUMBIABaltimore Office31 Hopkins Plaza

Baltimore, MD 21201410.962.2082

FLORIDAFt. Lauderdale Office7850 SW 6th CourtPlantation, FL 33324

954.423.7677

Jacksonville Office400 West Bay St., STE 35045

Stop TASJacksonville, FL 32202

904.665.1000

GEORGIAAtlanta Office

401 W. Peachtree St., NW,Summit Building Stop 202-D

Atlanta, GA 30308404.338.8099

HAWAIIHonolulu Office

300 Ala Moana Blvd., H-405Honolulu, HI 96850

808.539.2870

IDAHOBoise Office

550 West Fort St., Box 041Boise, ID 83724208.334.1324

ILLINOISChicago Office

230 S. Dearborn St.Stop 1005.CHI

Chicago, IL 60604312.886.9183

Springfield Office320 W. Washington St.

Stop 1005-SPDSpringfield, IL 62701

217.527.6382

INDIANAIndianapolis Office

575 N. Pennsylvania St.Stop TA 770

Indianapolis, IN 46204317.226.6332

IOWADes Moines Office

210 Walnut St.Stop 1005

Des Moines, IA 50309515.284.4780

KANSASWichita Office

271 W. 3rd St., NorthStop 1005-WIC

Wichita, KS 67202316.352.7506

KENTUCKYLouisville Office

600 Dr. MLK Jr. PlaceFederal Building-Room 622

Louisville, KY 40202502.582.6030

LOUISIANANew Orleans Office600 South Maestri Pl.

Stop 2New Orleans, LA 70130

504.558.3001

MAINEAugusta Office

68 Sewall St., Room 313Augusta, ME 04330

207.622.8528

MARYLANDBaltimore Office31 Hopkins Plaza

Baltimore, MD 21201410.962.2082

MASSACHUSETTSBoston Office

25 New Sudbury St.Boston, MA 02203

617.316.2690

MICHIGANDetroit Office

McNamara Federal Building477 Michigan Ave. - Room 1745

Detroit, MI 48226313.628.3670

MINNESOTASt. Paul Office

316 North Robert St. SStop 1005-STP

St. Paul, MN 55101651.312.7872

MISSISSIPPIJackson Office

100 W. Capitol St., Stop JK31Jackson, MS 39269

601.292.4800

MISSOURISt. Louis Office

Robert A. Young Building1222 Spruce Street

Stop 1005-STLSt. Louis, MO 63103

314.612.4610

MONTANAHelena Office

Federal Building301 S. Park, Stop 1005-HEL

Helena, MT 59626.0023406.441.1044

NEBRASKAOmaha Office1313 Farnam

Stop 1005-OMAOmaha, NE 68102

402.221.4181

NEVADALas Vegas Office

4750 West Oakey Blvd.Room 303

Las Vegas, NV 89102702.455.1241

NEW HAMPSHIREPortsmouth Office

Federal Office Building80 Daniel St.

Portsmouth, NH 03801603.433.0571

NEW JERSEYSpringfield Office

955 S. Springfield Ave.Springfield, NJ 07081

973.921.4043

NEW MEXICOAlbuquerque Office

5338 Montgomery Blvd. N.E.Stop 1005-ALB

Albuquerque, NM 87109505.837.5505

Do you want assistance from a taxpayer advocate? Thisassistance is not a substitute for established IRS proce-dures, formal Appeals processes, etc., but the taxpayeradvocate can give your tax matter proper and prompt

handling when you can�t get a problem solved throughnormal channels. Call toll free 1.877.777.4778 or callthe taxpayer advocate office nearest you listed below.

Taxpayer Advocate Contacts

282001 TAX HINTS


NEW YORKAlbany Office

Leo O�Brien Federal BuildingClinton Ave. & N. Pearl St.

Albany, NY 12207518.427.5413

Brooklyn Office10 Metro Tech Center

625 Fulton St.Brooklyn, NY 11201

718.488.2080

Buffalo Office201 Como Park Blvd.

Buffalo, NY 14227716.961.4850

Manhattan Office290 Broadway 7th floor

New York, NY 10007212.436.1011

NORTH CAROLINAGreensboro Office

320 Federal Place Room 125Greensboro, NC 27401

336.378.2180

NORTH DAKOTAFargo Office

657 2nd Ave, N.Stop 1005-FAR

Fargo, ND 58102701.239.5141

OHIOCincinnati Office

550 Main St. Room 3530Cincinnati, OH 45202

513.263.3260

Cleveland Office1240 E. Ninth St. Room 423

Cleveland, OH 44199216.522.7134

OKLAHOMAOklahoma City Office

55 N. RobinsonStop 1005-OKC

Oklahoma City, OK 73102405.297.4055

OREGONPortland Office

1220 S.W. 3rd Ave., Stop O-405Portland, OR 97204

503.326.2333

PENNSYLVANIAPhiladelphia Office

600 Arch St. Room 1602Philadelphia, PA 19106

215.861.1290

Pittsburgh Office1000 Liberty Ave.

Pittsburgh, PA 15222412.395.5987

RHODE ISLANDProvidence Office380 Westminster St.Providence, RI 02903

401.525.4200

SOUTH CAROLINAColumbia Office1835 Assembly St.

MDP 03Columbia, SC 29201

803.253.3029

SOUTH DAKOTAAberdeen Office

115 4th Ave. SoutheastStop 1005-ABE

Aberdeen, SD 57401605.226.7248

TENNESSEENashville Office

801 Broadway Stop 22

Nashville, TN 37203615.250.5000

TEXASAustin Office300 E. 8th St.

Stop 1005-AUSAustin, TX 78701

512.499.5875

Dallas Office1100 Commerce St.,

MC1005DALDallas, TX 75242

214.767.1289

Houston Office1919 Smith St.Stop 1005-HOU

Houston, TX 77002713.209.3660

UTAHSalt Lake City Office

50 South 200 EastStop 1005-SLC

Salt Lake City, UT 84111801.799.6958

VERMONTBurlington OfficeCourthouse Plaza

199 Main St.Burlington, VT 05401

802.860.2008

VIRGINIARichmond Office

400 N. 8th St. Room 916Richmond, VA 23240

804.916.3501

WASHINGTONSeattle Office915 2nd Ave.Stop W-405

Seattle, WA 98174206.220.6037

WEST VIRGINIAParkersburg Office

425 Juliana St.Parkersburg, WV 26101

304.420.6616

WISCONSINMilwaukee Office

310 West Wisconsin Ave.Stop 1005-MIL

Milwaukee, WI 53203414.297.3046

WYOMINGCheyenne Office

5353 Yellowstone Rd.Stop 1005-CHE

Cheyenne, WY 82009307.633.0800

TAXPAYERS LIVING ABROADOR IN U.S. TERRITORIES

A/C InternationalMercantile Plaza Building

2 Ponce De Leon Ave.Stop 27 1/2

Hato Rey, Puerto Rico 00918787.622.8931

Spanish.787.622.8931English.787.622.8940

CENTERSAndover Center

P.O. Box 9055, Stop 121Andover, MA 01810

978.474.5549

Atlanta CenterP.O. Box 48-549

Stop 29ADoraville, GA 30362

770.936.4500

Austin CenterP.O. Box 934

Stop 1005-AUSCAustin, TX 78767

512.460.8300

Brookhaven CenterP.O. Box 960

Stop 102Holtsville, NY 11742

631.654.6686

Cincinnati CenterP.O. Box 1235, Stop 11Cincinnati, OH 45201

859.292.5316

Fresno CenterP.O. Box 12161

Stop 01Fresno, CA 93776

559.443.7590

Kansas City CenterP.O. Box 24551

Stop 1005-KCSCKansas City, MO 64131

816.926.2493

Memphis CenterP.O. Box 30309AMF

Stop 12Memphis, TN 38130

901.395.1900

Ogden CenterP.O. Box 1640

Stop 1005Ogden, UT 84402

801.620.7168

Philadelphia CenterP.O. Box 16053

DP #1300Philadelphia, PA 19114

215.516.2499215.516.2677

Taxpayer Advocate Contacts

292001 TAX HINTS


Form 2848, Power of Attorney andDeclaration of Representation, isthe only form required to appoint

a representative. It can be used byenrolled or unenrolled preparers andcertain others.

Form 8821, Tax Information Authori-zation (TIA), allows taxpayers toauthorize individuals, corporations,firms, organizations or partnerships toinspect or receive confidential informa-tion. Unlike Form 2848, it does not givepermission to act on behalf of thetaxpayer.

You may mail or fax the forms to theappropriate center. Faxed Forms 2848and 8821 will be added to the center�sCentralized Authorization File (CAF)within 48 hours of receipt. All otherswill be processed within five calendardays. During the peak season, process-ing may take up to 21 calendar days.

Special request: If you fax a Form2848, please don�t mail a hard copy.Don�t send a POA for each client as astandard operating procedure � sendone only when it is really needed.

Form 2848 requirements� Taxpayer�s name, address, TIN and

phone number.

� Representative�s name and address.

� Type of taxes.

� Federal tax form numbers and yearsrequested.

� Declaration of representative.

� Representative�s signature, date anddesignation.

� Taxpayer�s signature and date. (Bothtaxpayers� signatures if married filingjointly.)

Did you know?If a taxpayer wants the representative

to receive a refund check on their behalf,they must specifically authorize therepresentative to receive the refund byinitialing Box 6. Reminder: Be sure tolist the name of the representative who

Power of Attorney processingand CAF procedures

should receive the refund check.If you submit a Form 2848� For a return, submit the form to the

center where the return was filed.

� In response to a notice, submit theform to the center with collectionresponsibility.

� For excise tax issues, submit the formto the Cincinnati Submission Process-ing Center.

� For employee plan issues, submit theform to the Memphis SubmissionProcessing Center.

� For exempt organization issues, faxthe form to the Ogden Center.

Form 2848 common errorsJoint Returns� Both taxpayers did not sign and date

the Form 2848.

� Didn�t indicate taxpayer�s ex-spousestatus from a joint return.

Business Returns� Didn�t indicate the title of authorizing

signature. (Box 9)

Any Return� Both representative and taxpayer

have not signed and dated Form2848, parts I and II. (Box 9)

� Didn�t include correct name, addressand SSN or EIN.

� Didn�t specify tax years, tax periods

When calling the toll-free numberon notices (available 7 days a week,

24 hours a day):

� Have POA (CAF identificationnumber) information ready.

� Have all IRS-related documentsready, especially the latestnotice.

� For quicker service, call onWednesday, Thursday or Fridaybetween 7:30 a.m. and 7:30 p.m.

Andover Centers310 Lowell St. Stop 321

Andover, MA 01810fax: 978.474.9701

Atlanta CentersPO Box 47-421 Stop 98Doraville, GA 30362

fax: 678.530.6392

Austin Centers PO Box 1231 Stop 6737

Austin, TX 73301fax: 512.460.0176

Brookhaven Centers1040 Waverly Ave. Stop 534

Holtsville, NY 11742fax: 631.654.6583

Fresno CentersPO Box 12067 Stop 65103

Fresno, CA 93776fax: 559.454.6334

Kansas City CentersPO Box 24551 Stop 6800

Annex 1Kansas City, MO 64131

fax: 816.823.7863

Philadelphia CentersCAF Unit DP 6211

11601 Roosevelt Blvd.Philadelphia, PA 19154

fax: 215.516.5994

Excise TaxCincinnati Centers

CAF Unit Stop 530Cincinnati, OH 45999

fax: 606.292.5185

Employee PlansMemphis Centers

CAF/FTD Unit, Stop 53245333 Getwell Road

Memphis, TN 38118fax: 901.546.4115

Exempt OrganizationsOgden Centers

PO Box 9941 Stop 6737Ogden, UT 84409

fax: 801.620.4249/4250/4251

SENDCOMPLETED

FORMS 2848


302001 TAX HINTS


A refund check will be returnedto the IRS if the address on thecheck is not the most current.

The refund will not be reissued until thecenter is notified of the new address.Complete and return Form 8822,Change of Address, to notify the IRS. Ifa refund check is lost or stolen, acompleted Form 3911, Taxpayer State-ment Regarding Refund, or a detailedletter must be sent to the Center.Reminders:� Allow for the normal processing time

before you inquire about refunds:Paper � 6 weekse-file/TeleFile � 3 weeks1040X � 8-12 weeksBusiness Returns � 6 weeks

� If a check was issued for a jointreturn, both signatures must bepresent on the Form 3911.

� The IRS and Financial ManagementService (FMS) determine if the check

Facts about refund checkshas been cashed. If the original checkhas not been cashed, a replacementcheck will be issued. If the check hasbeen cashed, a photocopy of thecheck will be mailed to the taxpayerwith a claim Form 1133. The com-pleted form should be returned toFMS at the address provided. Theinvestigation of lost or stolen refundchecks that have been cashed is atime-consuming process. Taxpayerscan expect a delay of three months toa year before another check is issued.

� Refund checks that are not cashedwithin one year of the issuance dateare automatically cancelled.

� Refund checks will not be splitbecause of a family dispute, eventhough a divorce decree or other civilaction may so direct.

� Overpayments will offset federal taxdebts and nontax debts such as childsupport before the refund is issued.

Treasury DepartmentCircular No. 230 contains

the rules governing thepractice of attorneys,

CPAs, enrolled agents,enrolled actuaries, apprais-

ers and other personsrepresenting taxpayers

before the IRS. It autho-rizes the Director of

Practice to grant or denyenrollment and to institutedisciplinary proceedings.

REMEMBER:

and tax forms you want covered bythe authorization. (The IRS cannotprocess Forms 2848 with generalreferences to all years, all periods,all taxes or specific issues. Exampleof correct reference: Income Tax,Form 1040, for calendar years 2000and 2001.)

Form 8821 requirements� Taxpayer�s name, address, TIN and

phone number.

� Appointee�s name, address and phonenumber.

� Type of taxes, form number andstarting and ending dates.

� Disclosure of Tax InformationAuthorization.

� Taxpayer�s signature and date (onlyone spouse�s signature is required).

� Must be received by the IRS within60 days of taxpayer�s signature.

Form 8821 common error� Didn�t answer item 4 correctly. If the

box is checked, the authorization willnot be entered on the CAF. If theauthorization is not for a specific use,do not check this box.

Revocations� When you no longer represent a

taxpayer, the power of attorney mustbe revoked to avoid unauthorizeddisclosures. The only people who canrevoke a power of attorney are thetaxpayer or the representative. Untilthe power of attorney is revoked, therepresentative will continue to receivecopies of notices and letters

� You can use a copy of a previouslysubmitted Form 2848 or 8821 torevoke an authorization. WriteREVOKE across the top of the copyin bold letters. It must also be signedand dated.

Continued from page 29Power of Attorney cont�d.WHERE

TO CALLFOR

HELP� To order forms, instruc-

tions and publications:Call 1.800.829.3676 toorder current and prioryear forms, instructionsand publications.

� To ask tax questions:Call the IRS with yourtax questions at1.800.829.1040.

� To ask questions about anotice:Call the IRS with ques-tions about your balancedue at 1.800.829.8815.

� TeleTax topics:Call 1.800.829.4477 tolisten to prerecordedmessages coveringvarious tax topics.

� TTY/TDD equipment:If you have access toTTY/TDD equipment,call 1.800.829.4059 toask tax questions or toorder forms and publica-tions.

312001 TAX HINTS


The Tax Return TranscriptWhat is a tax return transcript?

It�s a copy of tax return information that can be used for a loan, scholarship orother financial aid. A tax return transcript is a quick way to verify your taxinformation from the IRS � a line-by-line printout of the information on the

original tax return.

It�s fast, easy and free� Dial 1.800.829.1040. If you reach a customer service representative, tell them

you wish to order a transcript of your tax return.

� If you reach an automated voice message, you will hear a menu of options. Listenfor the option that says �. . . for questions about your personal tax records . . .�Press the number for that option.

� Continue to follow the voice prompts until you are asked to enter your SocialSecurity Number. (If you filed a joint return, enter the first SSN that you enteredon the return.)

� You will hear a voice prompt �. . . to request a transcript of your tax return . . .�Press the number for that option.

� Your transcript should arrive by mail within 10 to 15 days.

Paper request for a transcriptComplete IRS Form 4506 (Rev. 5-97), Request for Copy or Transcript of TaxForm. Form 4506 is available from the IRS Web site at www.irs.gov/ or by calling1.800.829.3676. The taxpayer�s signature is required. For even faster service, faxyour request. (See addresses and fax numbers at left.) Remember, there are nocharges for tax return transcripts.

Requests for photocopies of taxreturns may not be submitted viafax. Full payment of $23.00 per

return along with the completed, signedand dated Form 4506 should be mailed tothe center where the return was filed.Allow 30 to 60 days for delivery.

Other importantinformation� Allow at least 10 weeks processing time

after the original return is filed beforerequesting a copy or other information.

� Allow at least 30 days for a deliverywhen requesting prior year returns.

� Form W-2 information is available ninemonths after the end of the tax year, andrequests take six to eight weeks toprocess.

� Form 1099 information cannot berequested with Form 4506 and shouldbe obtained from the payer if possible.

How to request copies of tax returns� To request tax account information,

do not submit Form 4506. Instead,write or visit the nearest IRS office.Tax account information shows anylater changes that you or the IRSmade to the original return.

� Requests for copies of tax returnswill not be processed without theappropriate payment attached.

Remember: The Freedom of Informa-tion Act and Privacy Act do notprovide any greater access toconfidential tax information than isotherwise available under theInternal Revenue Code. Copies ofreturns, as filed, can be requestedby submitting a completed Form4506 and are available under theIR Code Section 6103(c) and (e).

Andover310 Lowell Street Stop 679

Andover, MA 01810fax: 978.474.9405fax: 978.474.5982fax: 978.474.5986

Atlanta4800 Buford Hwy. Stop 91

Doraville, GA 30362fax: 678.530.5326fax: 678.530.5327

Austin3651 S. IH-35 Stop 6716

Austin, TX 78741fax: 512.460.2272fax: 512.460.2354

Brookhaven1040 Waverly Ave. Stop 532

Holtsville, NY 11742fax: 631.654.6325fax: 631.447.4405

CincinnatiPO Box 145500 Stop 2801A

Cincinnati, OH 45250fax: 859.292.3592

Fresno5045 E. Butler Stop 28105

Fresno, CA 93888fax: 559.443.7822fax: 559.443.7823

Kansas City2306 E. Bannister Rd.

Stop 6700 Annex 1Kansas City, MO 64131

fax: 816.823.7667Memphis

PO Box 30309 Stop 5318Memphis, TN 38130fax: 901.546.4175

OgdenPO Box 9941 Stop 6734

Odgen, UT 84409fax: 801.334.4178

Philadelphia11601 Roosevelt Blvd. DP 536

Philadelphia, PA 19255fax: 215.516.1311

TRANSCRIPTS

& COPIES

http://www.irs.gov

322001 TAX HINTS


The Estate and Gift Tax Staffprovides information, assistanceand technical support to represen-

tatives of estates and practitioners. Theirwork includes problem resolution onissues involved in processing, taxcompliance, penalty abatements, exami-nation, closing letters, and determinationof tax and interest due by estates electinginstallment payment of estate tax underInternal Revenue Code (IRC) Section6166.

Estate and Gift StockValuation:

This compliance project reviews estateand gift returns reporting ownership oflarge dollar values in publicly tradedstocks and bonds. Values of thesesecurities are verified using third-partysoftware. A correspon-dence examinationprocess handlesdeficiencies attributedto any undervaluation.

DeferredPayment ofEstate Tax Under IRCSection 6166:

The Taxpayer Relief Act of 1997changed the four percent rate on the first$1 million (less exemption equivalent) totwo percent. The interest on the balanceof deferred tax is at a rate which is 45percent of the interest rate on tax defi-ciencies. The change is in effect forestates of decedents who die afterDecember 31, 1997.

Helpful Hints whenpreparing Forms 706(Estate) and 709 (Gift)returns:� When preparing Form 706, verify that

the SSN is correct. When two dece-dents� returns are filed using the samenumber, long delays in processing

Estate and Gift Taxmay result, including delays inissuing federal closing letters.

� Provide complete descriptions ofassets and include CUSIP numbersfor publicly traded stocks and bonds.Provide the number of shares andpar value for stock and/or face valueand interest rate for bonds.

� When reporting closely held businessinterests, family partnerships orfractional interest in property,provide detailed schedules to showhow returned values were determinedand provide current appraisals, ifavailable.

� If claiming the state death tax crediton Form 706, provide verification ofthe payment of tax. The IRS chargesnonrefundable federal interest on the

credit amountfrom the duedate until thebalance ispaid. Federalcredit interestis not paid onrefunds of tax

based solely on the state credit.

� When filing Forms 709 for bothhusband and wife where consent orgift splitting is involved, include acopy of the donor spouse�s returnwith the other return so annualexclusions for donees can be veri-fied. Not including a copy may causelong delays in processing.

� When filing Form 709, include thebasis amount under Schedule A, Part1, or else indicate �zero.� Thisinformation is required on the form,and if not provided may cause longdelays. The basis established by thedonors allows the donees to reducethe sale of the property by the basis.

�If claiming the state deathtax credit on Form 706,

provide verification of thepayment of tax.�

Delays in processingreturns filed fordeceased taxpayers

can be reduced or eliminatedby writing the decedent�sname, the word deceased andthe date of death in the top leftmargin of page 1, Form 1040.Also include a completedForm 1310 if required. SeePublication 559, Tax Informa-tion for Survivors, Executorsand Administrators, foradditional information.Including all of the requiredinformation will eliminatedelays caused by correspond-ing for missing or incompleteinformation.

DECEDENTRETURNS

TOP1040

ERRORS

� Taxpayer identificationnumbers or names fordependents didn�t matchIRS or SSA records. Wedidn�t allow the exemp-tions.

� Child tax credit wasfigured or entered incor-rectly.

� Refund amount or theamount owed was figuredincorrectly.

� Tax amount wasn�t thecorrect amount from thetax table for the taxableincome.

� Earned Income Creditwas figured or enteredincorrectly.

332001 TAX HINTS


The Underreporter Programanalyzes and processesreturns with potential

underreported income. The returnsare identified in the InformationReturns Program (IRP). After allcurrent year tax returns are pro-cessed, they are computer matched tothe corresponding IRP documents(Forms W-2, W-2P, 1099, 1098,etc.). For example, a W-2 for wagesis compared to the wages reported onthe return, and a 1099-INT forinterest is compared to the interestreported on the return.

When amounts reported on thereturn do not match amounts on IRPdocuments, an information returnlisting is sent to an automateddatabase showing all income that thetaxpayer reported to the IRS for theyear in question. The database alsoincludes a history of the accountingwhich is updated weekly.

In screening, a tax examinerperforms an in-depth analysis of thecase. The examiner determines if allincome in question can be identifiedsatisfactorily on the tax return. If itcan be found, the case is closed andthe taxpayer is never contacted. If theincome cannot be located anywhereon the return or cannot be readilyidentified, we send the taxpayer aCP-2501 or CP-2000 depending onthe issues involved.

The CP-2501 asks the taxpayer toexplain where on the return theincome is reported. This notice has nofigures or proposed balance dueamounts. If the discrepancy can beexplained or supporting documenta-tion is enclosed, the case is closed.The taxpayer is informed that all isresolved. If there is no response orthe information from the taxpayer isnot sufficient, a CP-2000 is issued.

Underreporter Programanalyzes unreported income

The CP-2000 is a proposal tochange the income, deductions, taxcredits or payments reported on thereturn. It is not a demand for pay-ment. Thetaxpayer isasked torespondwithin 30days fromthe date ofthe notice.Manycases areclosedagreedwith asignedconsent statement and/or full pay-ment. There are also partially agreedcases, where the taxpayer agrees tosome of the income inquired aboutand satisfactorily explains theremaining issue(s).

Many cases are closed with nochange to the tax liability becausethe taxpayer provided sufficientdocumentation that the income is nottaxable or the underreported amountis not sufficient to change the tax.

If, in the course of verifyingincome, the examiner finds that thetaxpayer made an error on the returnwhich calls for a refund, the IRS willissue one.

If the original notice comes backundelivered or we have not receiveda response from the taxpayer, weissue a 90-day Statutory Notice ofDeficiency. Before generatingstatutory notices, we check forpayments and new addresses.Notices are sent to the most currentaddress on file with the IRS. If fullpayment is found, we can close thecase at that time. If there is noindication of a response or full

payment, we will mail the StatutoryNotice of Deficiency. If taxpayersdisagree with the notice, they have90 days to petition the U.S. Tax

Court. Whetheror not theypetition the court,we will stillconsider anyinformation thetaxpayer submitsto resolve thedisagreement.

If there is noresponse, or thecertified statutorynotice is un-claimed at the

post office, the tax, interest andpenalties are assessed by defaultafter the 90-day deadline is past. Abalance due notice is then sent tothe taxpayer. The case goes tocollection if no payment is received.

Even though the case is now incollection status, the taxpayer canstill disagree with the assessmentand send correcting statements,letters from banks, etc., for consid-eration to have the tax, penalties orinterest reduced or abated. Thisprogram is also worked in theUnderreporter area.

We don�t recommend thattaxpayers file an amended return asa response to the statutory notice;however, if the taxpayer files aForm 1040X, it will be consideredwhen the case is processed. Tax-payers are requested on the noticenot to file an amended return,because a Form 1040X can delayprocessing. We can take all neces-sary actions with the taxpayer�sresponse.

342001 TAX HINTS


The Internal Revenue Codestates that the IRS will assesstax, allow overpayments and

collect taxes within a specific timeperiod, known as the Statute ofLimitations. When the Statute ofLimitations expires for a tax return,the IRS can no longer allow thetaxpayer's claim for overpayment orassess additional tax for that return.

Normally, the Assessment StatuteExpiration Date (ASED) is threeyears from the tax period due date,or three years from the received dateof the original return, whichever islater. The Statute will not expireuntil the taxpayer files a return andthree years have elapsed. Tax Forms941, 942 and 943 are exceptions.The ASEDs for these tax returns arethree years from April 15 of the yearfollowing their due date, or from thereceived date, whichever is later.

Generally, the Refund StatuteExpiration Date (RSED) expireswithin three years from the originaldue date of the tax return or twoyears from the date the tax was paid,whichever was later. Exception: TheIRS must receive an original delin-quent return, claiming a refund/credit

of prepaid credits (federal taxwithheld, timely estimated taxpayments, earned income tax credit,etc.) within three years of the ReturnDue Date (RDD), plus extensions,including the time of extensiongranted by a Presidentially DeclaredDisaster. To be timely, a claim forrefund/credit must be filed withinthree years of the original return.While the claim may be timely forthe decrease in tax, the refund/creditmay be limited. Prepaid credits maynot be refunded or offset unlessclaimed within three years of the duedate or extended due date of thereturn. If the original return was filedlate and the claim is being filedwithin three years of the original, theamount of refund/credit may belimited to the amount of tax paidwithin the three years immediatelypreceding the filing of the claim, plusany extensions of time for filing. Ifthe original return was filed timelyand the claim is being filed morethan three years after the original,the amount of refund/credit is limitedto the amount of the tax paid withinthe two years immediately precedingthe filing of the claim. If no return

Statute of Limitationswas filed, the claim is allowablewhen filed within two years from thedate the tax was paid.

The RRA �98, Section 3202,allows for the suspension of thestatute on filing overpayment claimsduring periods of disability. Section3202 suspends the running of thestatute of limitations on refundsduring the time the taxpayer ismedically, physically, or emotionallyunable to handle their financialaffairs. The disability must bemedically determinable and mustcontinually last for not less than 12months or result in the death of thetaxpayer. It does not suspend thestatute of limitations for taxpayersthat have a spouse or other guardianto act for them during the periods ofdisability. Section 3202 does notapply to any claim for refund orcredit that is barred as of the date ofenactment, July 22, 1998.

The Collection Statute ExpirationDate (CSED) is ten years from thedate of assessment of tax. If noreturn is filed for a tax period, theCSED cannot be computed and willnot expire.

Individuals, trusts,and certain estates

If you expect to owe tax of $1,000or more for the tax year, you mustprepay the tax by having tax with-held or by making estimated taxpayments. We charge a penalty whenthe total tax you pay during the yeardoesn�t meet the requirements of thelaw.

Generally, to meet the require-ments of the law (and avoid thepenalty), you must make estimatedtax payments if you expect to owe atleast $1,000 in tax for 2001 (aftersubtracting your withholding and

Estimated tax penaltiescredits) and you expect your with-holding and credits to be less thanthe smaller of:� 90 percent of the tax shown on

your 2001 tax return, or� The tax shown on your 2000 tax

return (110 percent of that amountif you are not a farmer or fisher-man and the adjusted grossincome shown on that return ismore than $150,000 or, if marriedfiling separately for 2001, morethan $75,000). (Note: This itemdoes not apply if you did not file a2000 tax return or that return didnot cover 12 months.)

Exception: You do not have tomake estimated tax payments if youhad no tax liability for the full 12-month 2000 tax year. Also, anindividual must be a U.S. citizen orresident alien for all of 2000.

Due dates andadditionalinformation

For 2001, estimated tax paymentsfor calendar year taxpayers are dueApril 16, June 15 and Sept.17, 2001and Jan. 15, 2002. You do not haveto make the Jan. 17, 2002 payment if


352001 TAX HINTS


you file your 2001 tax return by Jan.31 and pay the entire balance duewith your return. For due dates forfiscal year taxpayers and additionalinformation about estimated taxesand your 2001 tax liability, see Form1040-ES, Estimated Income Tax forIndividuals, or Form 1041-ES,Estimated Income Tax for Estatesand Trusts.

For more information on when theestimated tax penalty may be re-duced or removed, see the instruc-tions for Form 2210, Underpaymentof Estimated Income Tax by Indi-viduals and Fiduciaries.

CorporationsA corporation with tax of $500 or

more that fails to pay a correctinstallment of estimated tax in full bythe due date may be subjected to anestimated tax penalty. The penaltyrate applies to the period of under-payment for any installment. Com-pute the penalty at the rate of interestpublished quarterly by the IRS.

For tax years beginning afterDecember 31, 1993, the estimatedtax payment required in installmentsis the lessor of:1. 100 percent of the tax shown on

the return for the preceding year,if that year was a 12 month taxyear, and a return filed for thatyear showed a tax liability greaterthan zero.

2. 100 percent of the tax shown forthe current year (the current yeartax may be determined on thebasis of actual income or annual-ized income).

Note: The fact that your prior year�stax was zero does not exempt youfrom this penalty. In this case, youshould annualize your income.

Large Corporation � Forpurposes of paymemt of estimatedtax, a large corporation is one with

Continued from page 34Estimated tax penalties

at least $1 million of taxable incomein any of the last three years. A largecorporation is prohibited from usingtheir prior year�s tax liability(method (1) above), except indetermining the first installment oftheir tax year. Any reduction in alarge corporation�s first installment,as a result of using the prior year�stax, must be recaptured in thecorporation�s second installment. Inapplying the $1 million test, taxableincome is computed without regardto net operating loss carryovers orcapital loss carrybacks.

Form 2220, Underpayment ofEstimated Tax by Corporations, isused to determine if the corporationis subject to the penalty for under-payment of estimated tax and, if so,the amount of the penalty. Generally,a corporation does not have to filethis form because the IRS will figurethe amount of the penalty and bill thecorporation. A corporation shouldcomplete and attach this form totheir return if:� The annualized income installment

method and/or the adjustedseasonal installment method isused, or

� The corporation is a large corpo-ration, computing their firstinstallment based on their prioryear's tax.The corporation should attach

their annualized income worksheet toForm 2220.

Abatement ofpenalties

The Internal Revenue Code,Section 6651 authorizes the abate-ment of penalties for failure to filetax returns and/or failure to pay tax,if that failure is due to reasonablecause and not willful neglect.Individuals requesting reasonablecause consideration for a penalty

must submit a written supportstatement. You may request abate-ment of penalties for reasonablecause, but interest cannot be re-moved for reasonable cause.

The statement should be filedwith the director of the service centerwhere the tax return was required tobe filed. The declaration must bemade under penalties of perjury andmust fully explain the facts related tothe reasonable cause. Abatementrequests for certain penalties may bemade by telephone to a toll-freenumber shown on the penalty notice.Note: The tax must be paid beforethe request can be considered.

Forgiveness of penalties is decidedon a case-by-case basis. Generally, ifthe taxpayer exercised ordinarybusiness care and prudence, and wasnevertheless unable to file the returntimely, the delay is considered due toreasonable cause. A failure to paymay also be due to reasonable cause,if the taxpayer exercised ordinarybusiness care and prudence but couldnot pay the tax liability. They mustshow reasonable efforts to conservesufficient assets in a marketable formin an attempt to pay the tax duebefore a failure to pay penalty willbe abated.

If the IRS determines that failureto file was due to reasonable causeand not willful neglect, this penaltywill not be assessed. The taxpayerwould still be responsible for the taxowed plus interest due.Note: Late payment penalty andinterest will be charged on any taxpaid after the original return duedate. Even if you are granted anextension to file, you still must payall of your tax by the original returndue date. You may be granted anextension to file, but not to pay.Extensions to pay are only granted to


362001 TAX HINTS


United States Estate Tax Returns (Form706).

Penalty appealsprocedures

If an abatement of a penalty has beendenied and you want to receive furtherconsideration by an Appeals officer, abrief written statement of the disputedissue must be submitted to the servicecenter Appeals coordinator.

Provide the following information:� The name and SSN or EIN of the

taxpayer.� A statement that you want to appeal

the findings to Appeals.� A statement of facts supporting your

position in any contested factualissues and

� Any documentation supporting whyyou filed/paid your taxes late.

� If available, include a statementoutlining the law or other authorityon which you relied.

The statement of facts should bedetailed and complete, includingspecific dates, names, amounts, loca-tions, etc. It must be declared trueunder penalties of perjury. You may dothis by adding the following signed

declaration to the protest:�Under penalties of perjury, I declare

that the facts presented in my writtenprotest, which are set out in the accom-panying statement of facts, schedules,and other statements are, to the best ofmy knowledge and belief, true, correctand complete.�

If an authorized representative sendsthe protest, the following declarationmay be substituted:

�That he or she prepared the protestand accompanying documents, andwhether he or she knows personally thatthe protest and accompanying docu-ments are true and correct.�

Attach Power of Attorney andDeclaration of Representative (Form2848) or similar written authorization toyour written statement. Send yourrequest to:

Internal Revenue Service CenterPenalty Appeals Coordinator

The coordinator will review youradditional information to determinewhether the penalty should be reduced.If the request for appeal cannot beresolved immediately with the additionalinformation, the coordinator willforward the written statement to theAppeals Office servicing your district.


The IRS now has an automatedprogram freezing refunds ofmore than $300 when a tax-

payer account indicates an open taxdelinquency inquiry within the lastfive years.

The IRS sends letters to taxpayersrequesting they file the delinquentreturn or explain why no return shouldbe filed. If we don�t receive a re-sponse, we prepare a substitute forreturn on the missing periods. Thesecases involve refunds due to taxpayerswho file only when they expect arefund.

To avoid delays, delinquent returnsshould be mailed to the office that

Refund Hold Programsent the refund hold letter � not to alocal office. There is no need to sendanother current year return; doing somay only complicate the process. Theearliest the taxpayer could expect acurrent year refund is one full monthafter the delinquent return is pro-cessed. However, if the delinquentreturn shows a balance due, the heldrefund will be applied.

Practitioners should provide thetaxpayer�s daytime phone number andthe best hours to call. If there is aproblem with the return, it can beresolved more quickly by calling thephone number listed on the noticerather than by correspondence.

Using labels saves timeand increases efficiency.None of the information

on an IRS preprintedlabel affects whether

taxpayers are audited.

REMEMBER:

IRSINTEGRITYHOTLINE

The IRS expects itsemployees to conform

to the highest stan-dards of integrity. Ifyou have reason tobelieve that an IRS

employee is engaging inmisconduct, call:1.800.752.7001

ext. 968

Taxpayers who don�t paytheir taxes when they are duemay be subject to a failure-

to-pay penalty of .50 percentof their unpaid taxes for eachmonth or part of a month thetax is not paid. Beginning in2000, if they file their return

on time and enter into aninstallment agreement withthe IRS, this penalty will be

reduced to .25 percent.Note: If the installmentagreement defaults or isterminated, the normal

failure to pay penalty chargeswill resume.

INSTALLMENTAGREEMENT

REDUCESPENALTIES

372001 TAX HINTS


If a taxpayer asks for relief frompaying penalties, they must followspecific guidelines. Internal Rev-

enue Code, Section 6651, authorizesthe abatement of penalties for failure tofile tax returns and for failure to paytax if the failure is due to reasonablecause and not willful neglect. Individu-als requesting reasonable cause consid-eration for a penalty abatement nor-mally must submit a written supportingstatement to their service center.

CFR Section 301.6651 requires awritten statement, signed by the tax-payer or representative with a Power ofAttorney, under penalty of perjury, thatexplains the facts related to the reason-able cause. However, in the interest offairness, the IRS accepts unsigned andoral requests (if the penalty is $250 orless) with the appropriate documenta-tion by the employee handling the case

Reasonable causeabates penalties

when no reason exists to question thelegitimacy of the request.

Reasonable cause determinations arebased on the facts and circumstances ofeach case. Generally, if the taxpayerexercised ordinary business care andprudence and was still unable to file thereturn on time, the delay is considereddue to reasonable cause. A failure topay also may be due to reasonablecause if the taxpayer exercised ordinarybusiness care and prudence, yet couldnot pay the tax liability in a timelymanner. The tax due must be paidbefore a late payment penalty will beabated. If the IRS determines thatfailure to file was due to reasonablecause and not willful neglect, thepenalty will be abated. The taxpayer isstill responsible for the tax owed plusinterest.

Tax practitioners should mail alltypes of Form 1040 returns witha remittance to the lockbox.

There are procedures in Package X forpreparation and mailing of the 1040-Vwith lockbox mailing instructions andaddresses. These procedures not onlyprovide for expanding lockbox volumesbut also provide consistent proceduresfor tax preparers. Installment agree-ment payments and fees should also bemailed to the appropriate lockboxaddress. Not all individual tax packagescontain lockbox mailing instructions.

Individual tax packages are limitedin scope regarding which taxpayers willreceive the lockbox two-label envelope.Other taxpayers will receive the usualaddress envelope. Regardless of thepackage received by your clients, mail

LOCKBOX PROCESSING

Help your clients ensurethat their payments areproperly credited bystressing the importance ofwriting the followinginformation on their checkor money order:� SSN or EIN.

� Tax period covered bythe payment.

� Current mailing ad-dress.

� Correct name of the taxaccount.

� Type of tax form associ-ated with the payment.

� Make the check ormoney out to UnitedStates Treasury � notthe IRS.

It is even more importantto provide identifyinginformation if you use amoney order.

PAYMENT

TIPS

your Form 1040-V remittance returns tothe lockbox address. If your clientsreceive a preprinted Form 1040-Vpackage, encourage them to use thepreprinted Form 1040-V with theirremittance returns. The preprintedvoucher can be read through high-speedcomputer scanning equipment, eliminat-ing the need for data entry, thus ensur-ing fast and accurate posting of thepayment information.

Forms 4868, Extension Requests,with remittances are processed at thelockbox. (See the list of lockboxaddresses on the next two pages.)

The fastest, easiestand most accurate

way to file!

382001 TAX HINTS


Andover CenterForm 940

PO Box 371307Pittsburgh, PA 15250-7307

Form 940-EZPO Box 371324

Pittsburgh, PA 15250-7324

Form 941PO Box 371493






Form 1040-ESPO Box 371999




Form CP 521/523PO Box 371429


Atlanta CenterForm 940

PO Box 105887Atlanta, GA 30348-5887


Atlanta, GA 30348-5659











Form CP 521/523PO Box 105572


Austin CenterForm 940

PO Box 970017St. Louis, MO 63197-0017


St. Louis, MO 63197-0017


St. Louis, MO 63197-0013


St. Louis, MO 63197-0015


St. Louis, MO 63197-0016


St. Louis, MO 63197-0001


St. Louis, MO 63197-0027


St. Louis, MO 63197-0002

Form CP 521/523PO Box 970022

St. Louis, MO 63197-0022

Brookhaven CenterForm 940

PO Box 1365Newark, NJ 07101-1365


Newark, NJ 07101-0210

Form 941PO Box 416

Newark, NJ 07101-0416

Form 943PO Box 254

Newark, NJ 07101-0254


Newark, NJ 07101-1187Form 1040-ES

PO Box 162Newark, NJ 07101-0162


Newark, NJ 07101-2423

Form CP 521/523PO Box 22421

Newark, NJ 07101-2421

Cincinnati CenterForm 940

PO Box 6977Chicago, IL. 60680-6977


Chicago, IL. 60680-6796

Form 941PO Box 7329

Chicago, IL. 60680-7329

Form 943PO Box 6538

Chicago, IL. 60680-6538


Chicago, IL. 60680-6223


Chicago, IL. 60680-7422


Chicago, IL. 60680-6252

Note: All PO Box addressespreceded by

Internal Revenue Service

LOCKBOXADDRESSES

392001 TAX HINTS



Chicago, IL. 60680-6229


Chicago, IL 60680-6220

Fresno CenterForm 940

PO Box 60378Los Angeles, CA 90060-0378


Los Angeles, CA 90060-0150






Los Angeles, C . 90060-6000







Kansas City CenterForm 940

PO Box 970010St. Louis, MO 63197-0010


St. Louis, MO 63197-0010


St. Louis, MO 63197-0007


St. Louis, MO 63197-0009


St. Louis, MO 63197-0011


St. Louis, MO 63197-0006


St. Louis, MO 63197-0028

Form CP 521/523PO Box 970024

St. Louis, MO 63197-0024

Memphis CenterForm 940

PO Box 1210Charlotte, NC 28201-1210


Charlotte, NC 28201-1210



Form 943PO Box 1212










Ogden CenterForm 940

PO Box 7024San Francisco, CA 94120-7024


San Francisco, CA 94120-7028

Form 941PO Box 7922


Form 943PO Box 7353










Philadelphia CenterForm 940

PO Box 8726Philadelphia, PA 19162-8726


Philadelphia, PA 19162-8738

Form 941PO Box 8786


Form 943PO Box 8526










402001 TAX HINTS


We welcome your comments. Please send your comments and suggestions to:National Public Liaison

CL:NPL Room 7559 IR1111 Constitution Avenue NW

Washington, DC 20224*[email protected] (e-mail)

Let us hear from you

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