Transcripts are used more in Tax Resolution work, but they can also be helpful in tax preparation, too.
1 min read
IRS transcripts are notorious for being convoluted, but in the hands of a tax professional who knows how to read them, they can be incredibly useful— especially in serving clients above and beyond what is required.
Transcripts are used more in Tax Resolution work, but they can also be helpful in tax preparation, too. Here are some ways you can start implementing the use of transcripts, no matter what services you offer.
If the IRS is sending your client a notice, the notice will show up as one of the line items on your client's transcripts. If you keep an eye on the transcripts, you can alert your client of the upcoming notice, giving them a heads-up.
This kind of update will make your client see that you are really on top of things, especially where his or her best interest is concerned. It will also allow you to prepare for helping with any IRS trouble once your client receives the notice by mail.
Similar to tracking notices, paying attention to your client's transcripts will enable you to gain awareness of where your client stands with the IRS. Since a transcript shows what the IRS believes has happened with a taxpayer's tax history, reading transcripts allows you to catch errors, if any are made, along with assess your client's overall standing. For example, you'll be able to see any penalties, any interest owed on tax liabilities, what has happened with past returns, if and when the client has been audited, etc.
One application of this information is that, using the few most recent years' transcripts, you could quickly assess if a client qualifies for a penalty abatement or not.
You could also use transcripts to more easily amend a client's past tax returns. The client's transcripts will show you what happened with his or her returns in the past— helpful if your client doesn't have a physical copy of every needed return. In that same vein, you could reconstruct a tax return that has been lost if you have the required information from a transcript. Plus, you can request a transcript for free, unlike requesting tax returns.
Unfortunately, identity theft through the filing of fraudulent tax returns is on an exponential rise, with the IRS expecting to lose $21 billion to tax fraud this year. That's more than triple what it was two years ago.
Taxpayers who fall victim to tax fraud have to wait longer to get their refunds— the typical identity theft case taking 180 days to resolve. Some cases can take closer to a year.
One way you can help reduce tax return fraud for your clients is, again, by being familiar with their transcripts. If a tax return has been filed with your client's information, it will show up on his or her transcript as a line item. If your client hasn't filed a return yet, this is a good indication that someone else has used your client's information for tax fraud.
You could help prevent the fraudulent tax return from going any further by alerting both the IRS and your client as soon as you see the suspicious line item on the transcript. The damage done by the fraudulent claim will be significantly less if the refund money hasn't been paid out yet.
Your client will also have to fill out Form 14039, an Identity Theft Affidavit. The phone number for the IRS Identity Protection Specialized Unit is 800-908-4490.
Paying attention to and closely reading your client transcripts will enable you to delight your clients and work more efficiently.
We asked a couple practitioners what other ways they find using transcripts to be helpful, and here's what they said:
Interested in learning more about using IRS transcripts effectively? Download our free ebook: "IRS Transcripts: An Easy-to-Understand Guide."
Explore more of our recent Articles, User Stories, and Ebooks.
5 min read
2 min read
Canopy takes the headaches out of client management by offering a way to keep client info organized.
I love how easy it is to setup a new client in this software. Once set up, it's one click to get IRS transcripts downloaded for my review. This saves me at least an hour each week in comparison to the software I used to use.
This makes workflow for tax resolution manageable. This business is a bunch of hurry up and wait. This system helps to refresh my memory while transitioning to different clients.
The ability to securely share documents with clients as well as complete POAs from client contact data already in Canopy. The ability to route workflow between team members with color coded statuses allows us to work efficiently.
Cool features, outstanding customer service, constantly updating to make it better. I love that I can upload files easily to a secure client portal and we don't have to email files anymore. Absolutely can't imagine not having this software.
It's safe and secure. Clients are able to upload documents and the documents are saved their portal which as a result, keeps us better organized. The task feature keeps us organized and we know exactly the status of each client.
Submit this form, and we will be in touch soon to give you a custom demo.
Set a time for one of our product specialists to give you a guided tour practice.