Ohio IRS Tax Liaison Forum
17 November 2005 Dublin, Ohio
A) Lunch B) Business meeting 1) Call to Order - 12:20 2) Introductions (See attached membership list) Approval of Minutes from meeting on 29 September 2005 a. MSP to approve as presented Old Business New Business a. Use of Petty Cash fund Spring meeting pizza? Msp to use funds for pizza b. set meeting dates for 2006 i. Last Thursday of the month (except November) = May 25, July 27, Sept 28 and Nov 16, 2006 ii. May 25, 2006 is planning meeting C) Good of the order
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Business Meeting Adjourned - 12:30pm
D) Update on Prior Meeting IRS Issues - LaTanya Bacon i. See handout ii. CP-136 problems - IRS business unit has corrected, notices will now have record of deposits. Look back period programmed incorrectly, this has been corrected. iii. Joint vs. Separate estimated payments form being created to allocate payments on a pre-filing basis. Issue is still with pre-filing initiative group. iv. Problem with CP-2000 notices with no adjustment occurring in Michigan, IRS looking into cause. v. E-filing for 1040-X not expected to be available until 2011 vi. Great Lakes Area Stakeholder liaison initiative, commitment from associations to designate a point of contact. (Not a national product, this is only for our area.) Great Lakes Area = Michigan and Ohio
2 1. 48 hour acknowledgement of issue (actual answer may take longer) 2. Single answer from IRS to be distributed to all practitioner groups vii. Estimated Average Preparation Times and Out of Pocket Expenses by Return Preparation Method. 1. Price fixing??? 2. Rates are unrealistic for some practices 3. See La Tanya's detailed explanation 4. Purpose of this chart is for Burden Reduction's assistance to insure that issues being addressed are those with the largest burden.
E) Commercial Activity Tax - Dale Bishoff Ohio Department of Taxation i. Theory behind CAT = broad base, low rate, level the playing field, simplify tax calculation ii. Auditors from Corporation Franchise and Tangible Personal Property will be shifted to CAT as those taxes are phased out. iii. Form to be one or two lines, may not be tied to federal form iv. Tax is on activity, not on a product (yes, there might be double taxation) 1. consider the wholesaler selling to a distributor, selling to a retailer - there is a cascading effect of this tax which was intentional. v. No registration fee if registration not required until after November 15 vi. February 10 due date is not extendable BUT you may estimate and then correct before due date of next return. vii. Due date = must be received before February 10!!! Postmark date is NOT filing date for CAT. viii. Two main differences between Consolidated vs. Combined 1. Combined may not eliminate inter-company receipts, greater than 50% common ownership required 2. Consolidated may eliminate inter-company receipts but must include out of state entities, may elect to consolidate where at least 50% common ownership ix. Deed controls ownership of underlying real property x. 120,000 registrations received and posted to date. There are another 20,000 to open. xi. Tp can change the consolidated registration to combined up till 2/9/06 F) Individual Income Tax Changes - Delbert Harlan 614-387-1803 i. Tax Rate reduced by 4% effective July 1, 2005 ii. New tax credit - FAGI 9,999 or below = no tax iii. 1350 = personal exemption iv. Med Savings = 3,731 contribution limitation v. Manufacturing Equipment Grant - on front of return, must attach copy of grant request form to return (Replaces 2nd Mfg Credit) vi. Military Injury Relief Fund - contribution line available for 2005 returns (Note contribution is only for Iraqi Freedom theater of fighting. Election is irrevocable) vii. Interest rate is at 6% viii. 2006 tax year - now 153 taxing school districts ix. Ohio will honor federal 6 month extension
3 x. See handouts for changes to new returns and for grant request forms xi. Questions: 1. Notices for one penny??? a. Issue being addressed currently b. These are response notices, notifying Tp that liability is cleared 2. Variance notices showing no change also being addressed 3. Can ODT do anything to force PERS and STRS to withhold School District tax? a. ODT does not have authority to require PERS or STRS to withhold. 4. MFS vs. MFJ estimates - separate estimates are easily combined in the state's system, but the system has difficulty automatically splitting payments when requested. a. Ohio needs to develop a form to authorize split. Information being provided by LaTanya regarding the IRS proposed form. 5. Why withholding tables are never adjusted? a. ODT currently looking at a revision, target date for release = Dec 2, 2005 G) Ohio E-File Changes - Karen Fisk i. E-File Sch E? 1. This year we will be able to e-file pass-through entity information, but not the Sch E (with IT-1040) ii. Refunds in excess of $1,000 occasionally are delayed based on W-2 limitations 1. Result of excessive withholding on W-2 2. ODT program has built in checks and balances which kick out withholding not within a standard range to prevent refunds claimed from fraudulent W-2s. When refund is stalled, Tp will receive request for copy of W-2. 3. ODT has encountered multiple schemes to create fraudulent returns based on false W-2s. 4. Just because Tp's return checked one year doesn't exempt return from request for backup in a future year. It may be that certain Tp will be better off filing paper returns for Ohio. iii. Ohio has corrected the e-filing problem where negative AGI was converted to positive as a result of the issue being brought up at this forum. iv. Does state offer transcript for non-filers? NO, options: 1. File form with IRS and get copy of original W-2 2. Utilize the federal substitute for W-2 (Form 4352) v. Problems : Call 614-466-0197 1. fax for W-2 matching issues 614-466-0199
H) Non-Liable Spouse - Deborah Smith Ohio Department of Taxation i. Call with refund problem 614-466-0082 ii. Tax Commissioner Rule and ORC sets trigger dates ODT can't change 1. ODT to contact prior year Non-Liable Spouses to see if they may face same issue in 2005
4 2. 1-800-282-1780 Taxpayer Services to determine if offset is on Tp file. Tp must call or practitioner must have POA
I) Collections - Marcia Macon-Bruce and Sue Pohler Ohio Attorney General's Office i. See handout 1. Note important contacts: a. Business Unit 614-446-7095 b. Personal Income Tax 614-752-7541 c. General Number 614-466-8360 d. E-mail www.ag.state.oh.us 2. No statute of limitations on debts certified to AG 3. Trust fund taxes generate officer assessment and business assessment, assistors can access both files and help settle both issues 4. Problems can be addressed through phone call or e-mail to Marcia or Sue a. Call 614-466-8459 (Marcia) or 614-466-4510 (Sue) b. E-mail: spohler@ag.state.oh.us or mmacon-bruce@ag.state.oh.us ii. Questions and comments: 1. RE Closing - tax owed - practitioner's need breakdown of taxes, penalties and interest. Tp generally don't ask at the time of the closing. a. Call Sue and she can provide that information 2. Perpetuity of Claims - how can something go 22 years without the taxpayer being contacted? a. System is in place to prevent this from happening b. OIC and No Records provisions to help settle old cases c. Debt may be written off if it absolutely can't be collected d. It is very rare that a person hasn't been contacted e. CUBS program has been customized to prevent this from occurring f. Debt over 40 years IS now written off = NEW Statute 3. When Ohio refers a case, how often does AG's office generate letter? What are steps? a. Claim certified w/in 24 hours b. Three letters mailed to Tp w/in 45 days c. AG keeps cases 6 months before turning over to outside vendor or special council. Outside Vendor or Special Council keep case for 2 years. 4. 50% of what is done in the AG office is account resolution. There is a zero complaint tolerance in the AG office. 5. If you know account is certified, send corrected returns to AG office or to Special Council NOT to ODT 6. AG office now has scanning system and will have computer record of ALL forms filed with AG 7. State needs to provide guidelines as to what an acceptable offer would be, similar to what IRS has done.
5 a. Tp or Practitioner can work with Special Council to try to find reasonable number 8. AG's office can work with Tp who are willing to settle by full pay of the tax but can "compromise" penalties and interest 9. AG office also represents State in bankruptcy or foreclosure issues. AG can provide payoff status on all certified debts.
Respectfully Submitted, Elizabeth Buckingham, EA Secretary