Recently, thousands of Americans have been receiving a variety of scary letters from the IRS that they most definitely were not expecting. These have included bills for taxes they thought were already paid, threatening collections notices, and (sometimes threatening) audit notices.
The problem got so out of hand that the IRS was forced to stop sending many of these types of letters to all Greater Memphis taxpayers, even people that legitimately do owe money.
Well, remember that massive backlog of mail that the IRS hasn’t processed yet? That mail includes tax returns that haven’t been processed, payments that haven’t been applied, and other documentation. The IRS computer systems detected that these returns were missing, payments weren’t made, and documentation wasn’t sent. Thus auto-send of said scary letters to Greater Memphis taxpayers.
This entire situation perfectly illustrates something that’s just as important as periodically checking your credit reports and Social Security statements: Checking your IRS account transcripts.
When we work with Greater Memphis clients on a tax debt issue or an audit, checking these account records is one of the first things that we do because of the sheer amount of information they contain. Given current issues at the IRS, plus the continued rise of tax-related identity theft, it’s a good idea for you to keep an eye on these records, too.
There are three basic types of IRS account transcripts that we look at: Your return transcripts, your account transcripts, and your wage and income transcripts.
This account record is a log of everything on your tax return. It’s literally a line-by-line record of what you filed, including all attached schedules. You have a unique return transcript for each year that you’ve filed a tax return.
When examining a return transcript, there are two things that we are primarily looking for:
- That it even exists as indication that a tax return was filed and processed.
- Line item numbers, especially for income, deductions, credits, and tax payments, all match what they’re supposed to be.
This is a check that you can, and should, make yourself, also. This helps to ensure that the tax return the IRS has on file is the one that was actually filed by you and not an identity thief and that the numbers all carried over properly from either your paper or e-filed tax return. Yes, even e-filed tax returns can sometimes have numerical errors.
Wage & Income Transcripts
These are a record of the income you’ve received from various sources. As you’re likely aware, any company that issues you a W-2 or 1099 of any type is required to send a copy to the IRS. Your wage and income transcript is a digital copy of those W-2 and 1099 records.
We always look to make sure that the records on file match what you received, which should also match up with other records, such as your pay stubs and account statements. A discrepancy between your records and these IRS records could trigger an audit or provide an opportunity to amend your return and pay less tax.
Every action that you, we, or the IRS takes in regards to your tax accounts is logged. This log is a history of all significant events for one particular tax year. You’ll have a separate account transcript for each year.
This log will contain a wide variety of entries. Just some quick examples:
- When you filed a tax return.
- When the IRS sent you a lien notice.
- When we file a Power of Attorney to represent you.
- When you enter into a payment plan.
- Date and amount of all payments that you make.
- Date and amount of any additional taxes or fees you get charged by the IRS.
This log of all the actions taken by you, for you, or against you is one of the most important things we look at when representing you. It provides us with a tremendous amount of information, especially regarding where you are in the bureaucratic machine at the IRS.
Obtaining IRS Records
There are several ways for you to obtain these records. The two easiest ways are to:
- Use the IRS Get Transcript tool. You can request transcripts by mail, or online. Creating an online account with the IRS can be a bit tedious and painful, but it’s worth doing so that you can monitor your account records on a regular basis. Again, you want to do this frequently, just as you do with credit reports and Social Security.
- We can obtain transcripts for you via an IRS system specifically created for tax professionals. We’ll need to have you sign an authorization, of course, that allows us to do this. We can then pull transcripts for you periodically and review them with you to help you understand what they mean.
If you need assistance setting up your IRS online account, or would like us to pull these records from the IRS for you, we’d be happy to help. Just schedule a time to chat here:
Helping you face the IRS,