Circuit Breaker

This message is from John Woods, State Coordinator.

We are experiencing some issues with one of the workarounds we have recommended for TaxSlayer shortcomings, specifically with respect to the Circuit Breaker.

There are some cases where the software does not calculate the income for Circuit Breaker purposes correctly. What we have recommended is putting the required adjustment on line 6 of the CB form. What we have found is when that number is a positive number that workaround works fine. However, when the adjustment is negative there is an issue.

As we suggested, the return calculates correctly and it successfully Efiles. Unfortunately, after the return is accepted at the DOR, computer based analysis believes it has detected an error when it sees a negative number on CB line 6 and automatically generates a Taxpayer Letter. In discussions with the DOR, since there is no human intervention at this point, there is no way to train someone not to send the letter. We both agree they can not reprogram their computers quickly enough and run the required regression testing in time to impact the next four weeks. They will therefore continue to generate these letters.

We have two cases we need to address: those returns that have already been filed and will get letters and future returns we will file where we would like to head off letters.

With respect to the returns that have already been filed that get a letter in the future, while it remains frustrating dealing with the shortcomings of the tools we have been supplied, I think we have a reasonably efficient plan.

  1. The Taxpayer will still get the computer generated letter questioning the return.
  2. Over the next several days, I will generate a “standard response letter”, which will be distributed to all sites.
  3.  Once our preparer verifies the only issue in the letter is the negative number on CB line 6 and the CB income calculation is correct, they will give a copy to the taxpayer to use to respond to the DOR’s inquiry.
  4.  The letter will explain the situation. The DOR will share my letter with the examiners in advance so when they see the letter and, once they verify the return came from a TaxAide site, they can rapidly move forward to close out the inquiry, if that is the only issue.

With respect to how to handle future returns where there is a negative number on CB line 6, the situation is less clear. We see four choices none of which is enormously attractive.

  1. Turn the Taxpayer away.
  2. Just file the return and deal with the letter when it is generated as described above.
  3. Fill out an accurate paper CB schedule. (NOT THE COMPUTER GENERATED CB for reasons that will become clear below). Then replace the CB in the return with the paper schedule CB, in which the correct CB income is indicated without the use of the negative number on CB line 6. Mail in the return. This should force hand processing because the computer generated bar code will not be present on the CB form so the data will need to be hand entered.
  4. Use the computer generated return. Alter the CB form to be correct as above, in pen. Obscure the Bar Code, so it cannot be automatically read (e.g. place a white sticker over the bar code.). Again this should force hand processing and thus the entering of the correct numbers.

If either option 3 or 4 is selected, we recommend you attach as page 1 a letter we will supply to all LCs this week explaining what we are doing and why. We recommend you use the standard letter as we hope that the data input people will get used to seeing it and that will improve the chances the return will be processed correctly.

Neither 3 nor 4 has been tried long enough that we are certain will successfully suppress a letter, but we expect it to. We have higher confidence in three than four.

I understand this just adds to the frustration we have experienced with the tools the IRS and National Authorities have supplied us with this season.

On the flip side I can honestly say it has been inspiring to watch how the Massachusetts TaxAide performers have stepped up and continue to serve the citizens of Massachusetts  in spite of one of the most difficult situations of any state in the nation.

As always, thanks for all you do for TaxAide and especially all you do for our clients.

John Woods, State Coordinator
Massachusetts Tax-Aide

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