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CONSUMER PROTECTION LAWS
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HOW TO GET INFORMATION FROM THE IRS:
IRS HOTLINE (866) 860-4259
This IRS number will provide the MFTRA-X transcripts and
can answer questions about the taxpayer's tax history over
the phone (with your faxed power of attorney).
RECOMMENDED IRS TRANSCRIPTS:
As a matter of routine
we recommend that you obtain at least two kinds of transcripts
for each tax year. These are the
MFTRA-X
(sometimes called the “literal” transcript, or “record of
account); and the IMFOLI
(individual master file online). These transcrips are about
all the typical bankruptcy lawyer should attempt to utilize
without seeking expert help.
For most cases the
MFTRA-X
will provide the critical dates (i.e., dates of assessment,
date tax return was filed, date tax return was due, dates of
prior bankruptcies, audits and offers-in-compromise). It will
also indicate whether a lien has been filed and the filing
date (it won't, however, show what county it was filed in).
The
IMFOLI
will indicate in most cases whether the tax return that was
filed was a substitute for return (SFR or SUBST), or the
taxpayers return (“POSTED”). The IMFOLI will also indicate if
there were subsequent additional assessments after the return
was filed.
If the MFTRA-X does not
provide all the information you need, or raises questions in
your mind about certain dates or transactions, you should next
obtain either the IMF-SPECIFIC
transcript or the TXMOD.
These contain much more information, but are written entirely
in code. You will need to know something about what to look
for on these transcripts. If you do not feel confident about
using them, enlist the help of a lawyer or enrolled agent who
knows how to read them.
HOW TO GET THEM:
The IRS MFTRA-X transcript
can usually be obtained quicker than other kinds of
transcripts. They may be requested by phone.
Step 1. You should first fax
your
power-of-attorney,
signed and dated by your client and by yourself, to the
national IRS fax line for powers-of-attorney. This is (fax
no.)
(801) 620-4249.
Step 2. Wait a day or two,
then call the national IRS priority hotline
phone number:
(866) 860-4259.
You should be given the option to
press “1” to select an individual's record of account, or
press “2” for an individual's business account.
Step 3. In most cases you will
press “1.”
At that point, you will be given
the option of waiting on the line to speak with a real person.
Step 4. When the person comes on
the line, explain who you are and what you need. Explain that
you faxed your power-of-attorney to the national fax number.
The staff of the priority hotline typically refer to the MFTRA-X
as the “record of account.” Tell them you need the record for
each tax year for which you believe your client owes.
You will be asked your client's
social security number and name. You should have that at hand
before you place the call. If you select option “2” for
business records of account, you will be asked for the federal
I.D. tax number for the business.
The IRS person will probably put
you on hold to check whether your POA has posted or not. If
not, volunteer to fax it directly to the person to whom you
are talking at his or her individual fax number.
The IRS person will order the
transcripts pulled and probably fax them to you within a few
hours. Hard copies will be mailed in a couple of days.
WHAT TO LOOK FOR:
USING THE MFTRA-X or "Literal" transcript
For graphic
of what a
MFTRA-X
looks like click here.
The MFTRA-X is the simplest of the
various tax transcripts. It is easiest to interpret, because
there is a short English description next to most of the
important code entries. Other transcripts are entirely in code
and are more challenging to interpret.
There will be one MFTRA-X
transcript for each tax year that you have requested. Note
that the transcript does not have the letters MFTRA-X
appearing anywhere on it. This is because the letters are
simply the computer code entered by the IRS to bring up this
particular transcript.
All MFTRA-X transcripts have the
same basic look or format. The most obvious feature is that on
each transcript having any kind of history on it, about
one-third of the page from the bottom, on the left side, will
appear the number “150.” This is a transaction code number.
Next to this number will be a short explanation. Usually, one
of two messages will appear: it will either say Return Filed
and Tax Assessed, or it will say Substitute For Return filed.
To the right will be a date. In the far right column there may
be a zero or a dollar amount
Immediately below the code 150
will appear additional codes, with their short explanations.
Here is a checklist to use to
check each transcript.
1. Check the taxpayer's name and
social security number; is this transcript for the right
taxpayer?
2. Check the tax year (upper right
corner). Is this the year you are interested in?
3. Check the amount owed, if any
(about a third of the way down from the top, on the left;
“Account balance - plus accruals.” If there is a zero, your
client may have already paid off this account.
4. Find most recent date a
tax was assessed. The codes 150, 290 and 300 are the
assessment codes. Some entries using these codes may have zero
posted instead of an amount, in the far right column. The
one's with zero can be ignored. Go down the list looking for
any 290 or 300 entries, and find the most recent assessment
for which an actual dollar amount of tax was assessed. This is
your ASSESSMENT DATE.
5. Determine when the
taxpayer filed his tax return. About half-way down from the
top, on the left, find the words “Tax per return.” To the
right of those words should appear a dollar amount. If the
number is zero, it means either than your client did not file
a return, or he filed one showing no tax owed. If there is an
$ amount showing other than zero, this means your client filed
a tax return (because the figure found there is taken from a
filed return). Now look down about five lines. You will find a
line saying “Return due date or return received date.” This is
the date the TAX RETURN
WAS FILED. Note,
however: if there was no dollar amount appearing next to “Tax
per return,” this date may not necessarily be the date your
client filed a return; it may be the date a substitute for
return was filed, instead.
6. Determine the most recent date
a tax return was due. Normally, this date will be April 15 of
the following year. So, if you are looking at the year 1995,
for example, usually the due date will be April 15, 1996. But
some taxpayers file extensions to file their returns. This
pushes the due date back to either August 15, or October 15.
Examine all the codes under
code 150. Look for the code 460. Each 460 represents an
extension filed. If there are no code 460s on the transcript,
no extension was filed, and the due date is April 15 of the
following year. If there is one or more 460 entries, find the
most recent one, and find the date the extension went to.
THIS IS THE DUE DATE OF
THE RETURN.
In about half of your cases, the
three critical items (date of assessment, date return was
filed, and due date) can be readily ascertained by looking at
the MFTRA-X and looking for the items describe above.
However, in about half the
cases the information contains anomalies, or contains
additional information that may complicate the tax discharge
analysis. if you find any anomalies on the transcript (such as
the codes or the information not being consistent with what I
have described above) you are risking coming to the wrong
conclusions about the dates. In that case, you are better off
letting
TaxJustice.com
examine the transcripts for you.
Also, any of the following codes
may indicate problems that may bear on the discharge analysis.
290 Additional tax assessed
300 Additional tax assessed
320 Fraud penalty
460 Extension to file return
420 Audit commenced
480 Offer-in-compromise submitted
520 Previous bankruptcy (or other
tax litigation)
582 Tax lien filed
910, 914, 916, 918 Criminal
investigation
595 Account referred to
examination
Reprinted from :
The Professional
Bankruptcy Library
For a thorough discussion of
tax transcripts and how to use them in analyzing
dischargeability in bankruptcy, obtain King's
Discharging Taxes in
Bankruptcy.
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