IRS TRANSCRIPT ANALYSIS
CLARICE LANDRETH, EA, NTPI FELLOW
Understanding various IRS transcripts is key to resolving
a taxpayer’s IRS issues
You will learn how to read and understand various IRS
transcripts, the entries made on those transcripts, and
how they impact the taxpayer’s overall IRS situation
OBJECTIVE
After completing this course you will be able to:
• Describe various ways a representative can obtain IRS
transcripts
• Explain what a transaction code on an IRS transcript
indicates about actions on the account
• Determine if a taxpayer qualifies for First Time Abate
from IRS account transcripts
• Demonstrate the ability to analyze IRS transcripts
through the use of case studies
AT COMPLETION OF COURSE
Helps determine information, such as:
• Estimated Tax Payments
• Extension Filed
• Balances
• Original or Substitute Return Filed
• Return Filed on Time
TRANSCRIPTS
HISTORY OF TAXPAYER’S ACCOUNT
• Important Notices Issued
• Collection Due Process (CDP) Hearing filed?
• Installment Agreements
• Liens Filed/Released
• Payments
• Collection Statute Expiration Date (CSED)
TRANSCRIPTS
HISTORY OF TAXPAYER’S
ACCOUNT(CONT’D)
6
Important actions previously taken include:
• Number of installment agreements (IA)
• If an Offer in Compromise (OIC) had been filed
• Open to collection action
• Identify serial non-filers
• Substitute for return (SFR)
• CSED tolling events
TRANSCRIPTS
IMPORTANT ACTIONS
Two main ways for Tax Professionals to obtain
transcripts:
• e-Services
• Practitioner Priority Service (PPS)
TRANSCRIPTS
OBTAIN TRANSCRIPTS AS A TAX
PROFESSIONAL
Examples of times you will call PPS:
• No 2848/8821 and taxpayer is in your office
• 2848/8821 filed recently and is not recorded
• 2848/8821 incorrectly recorded
• Taxpayer is a victim of identity theft
PRACTITIONER PRIORITY
SERVICE(PPS)
POA not on file
PPS can upload transcripts to secure mailbox on your
e-Services account
Requires e-Services User ID
e-SERVICES AND SECURE MAILBOX
Transcripts not currently available
Must contact PPS to obtain the balance due amount
Helpful to list separately on Power of Attorney
SHARED RESPONSIBILITY
PAYMENTS
Taxpayer will need to provide the following information to
register and use Get Transcript:
• SSN
• Date of Birth
• Filing Status and Mailing Address
• Access to email account
• Personal account number from a credit card, mortgage, etc.
•
Mobile phone linked to their name.
GET TRANSCRIPT
TRANSCRIPTS
TYPES (cont’d)
Transcript Type Years Limited To
Tax Return Available for the current year and returns
processed during the prior three
processing years
Tax Account Any account that is active on the Master
File
Wage and Income Current and nine prior tax years
Record of Account Current and three prior tax years
Verification of Non-Filing Current and three prior tax years
Available for individual tax returns
Limited to following BMF returns:
• Form 1065, U.S. Return of Partnership Income
• Form 1120, U.S. Corporation Income Tax Return
• Form 1120-H, U.S. Income Tax Return for Homeowners
Associations
• Form 1120-L, U.S. Life Insurance Company Income Tax
Return
• Form 1120-S, U.S. Income Tax Return for an S Corporation
TRANSCRIPTS
TAX RETURN (CONT’D)
Appendix A – 14
Provides an account history
Available for any account that is active on the Master File
TRANSCRIPTS
TAX ACCOUNT
Wage and income transcripts are derived from information
returns, including, but not limited to:
• W-2 Series Forms
• 1098 Series Forms
• 1099 Series Forms
• Form 2439, Notice to Shareholder of Undistributed
Long-Term Capital Gains
• Form 5498, IRA Contribution Information
TRANSCRIPTS
WAGE AND INCOME (CONT’D)
TRANSCRIPTS
RECORD OF ACCOUNT
TRANSCRIPTS
RECORD OF ACCOUNT (CONT’D)
Proves that the IRS does not have a record of an IMF return
processed for the requested period
Available for current and three prior tax years
TRANSCRIPTS
VERIFICATION OF NON-FILING LETTER
• Code 140 Inquiry for Non-filing of Tax
Return
• Code 150 Tax Return Filed and Tax Liability
Assessed
• Code 290 Additional Tax Assessment
• Code 420 Examination Indicator
• Code 480 Offer in Compromise Pending
• Code 500 Military Deferment
TRANSCRIPTS
COMMON TRANSACTION CODES
• Code 520 IRS Litigation Instituted
• Code 530 Currently Not Collectible
• Code 582 Lien Placed on Assets Due to
Balance Owed
• Code 583 Removed Lien
• Code 599 Satisfying Transaction
TRANSCRIPTS
COMMON TRANSACTION CODES (CONT’D)
• Code 608 Write-off Balance due
• Code 922 Unreported Income
• Code 960 Appointed Representative
• Code 971 Miscellaneous Transaction
TRANSCRIPTS
COMMON TRANSACTION CODES (CONT’D)
Same TC may have a different explanation
Complicates reading transcript
Evaluate some codes in the context in which they are used
TRANSCRIPTS
SAME CODES WITH DIFFERENT EXPLANATIONS
Tax Return Filed and Tax Liability Assessed
Used by IRS for both original returns and substitute for
returns (SFR)
CODE 150
Bankruptcy or Other Legal Action Filed
Legal actions include but are not limited to:
Bankruptcy
Filing a Collection Due Process (CDP) Request
Tax Court Petition
CODE 520
Satisfying Transaction
Indicator for a Substitute for Return
TC 599 followed by “tax return secured”
does not mean that an original return was filed
CODE 599
42
Miscellaneous Transaction
Catch-all for many different types of transactions
Including:
Notice Issued
Pending Installment Agreement
Etc.
CODE 971
Lots of Data
Data missing, such as:
Liability with Revenue Officer
Assessment Statute Expiration Date
TRANSCRIPTS
BASICS OF READING ACCOUNT TRANSCRIPTS
44
JOINT 1040 ENTRIES FOR SEPARATE ASSESSMENT
1040 SEPARATE ASSESSMENT ENTRIES
Available for penalty relief the first time a taxpayer is
subject to one or more of the following penalties:
• Failure to file (FTF)
• Failure to pay (FTP)
• Failure to deposit (FTD)
*Note: IRS will apply FTA criteria before applying
reasonable cause criteria
IRM 20.1.1.3.3.2.1 First Time Abatement
IRM 20.1.1.3 Criteria for Relief From Penalties
FIRST TIME ABATEMENT (FTA)
FTA relief does not apply to the following:
• Returns with event-based filing requirement such as
Form 706 and Form 709
• Daily delinquency penalty – IRC 6652(c)(2)(A) and IRM
20.1.8 Employee Plans and Exempt Organization
Penalties
• Information reporting that is dependent on another
filing
• List is not all inclusive
FIRST TIME ABATEMENT (FTA)
(CONT’D)
Requirements:
• Taxpayer has filed, or filed a valid extension for, all
required returns currently due, AND
• Taxpayer has paid, or arranged to pay, any tax currently
due. Taxpayer is current with this requirement if they
have a valid open payment plan and are current with
the required installment payments.
FIRST TIME ABATEMENT (CONT’D)
NO MISSING RETURNS/IA BUT NO PAYMENTS BEING
MADE
DOES 2018 BALANCE QUALIFY FOR A FTA?
EXAMPLE
TAX PERIOD BALANCE
2015 NO BALANCE/NO PENALTIES
2016 NO BALANCE/NO PENALTIES
2017 NO BALANCE/NO PENALTIES
2018 $84,050.55/$11,574 PAYMENT PENALTIES
BREAKOUT ROOMS
Identify the following on the transcript:
• Assessed Balance
• Amount Currently Owed
• Date Return Was Filed
• Date Tax Was Assessed
• Original Return or Substitute for Return
• Date Collection Due Process Notice of Intent to Levy
Issued
• Did the taxpayer file bankruptcy?
ACCOUNT TRANSCRIPT
ANALYZATION
All required returns are filed. Analyze the provided
transcripts and answer the following:
• Does the taxpayer qualify for a first-time abatement?
• Explain why or why not.
FIRST-TIME ABATEMENT EXAMPLE
Transcripts are a crucial tool in our representation
toolbox
Use this information to help direct the course of the
case
Proficiency in analyzing transcripts can help prevent
further problems in our representation
CONCLUSION
