Stephen Olsen About Stephen Olsen

Stephen J. Olsen’s practice includes tax planning and controversy matters for individuals, businesses and exempt entities for the law firm Gawthrop Greenwood, PC.

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  1. Thanks for the interesting item. As to “processible returns:” In my capacity as a member of various IRS-practitioner liaison groups, I conducted a running battle with the IRS for over 10 years to get them to change their procedures for handling returns that they considered “non-processible” based on missing schedules, such as W-2s. They used to stamp the returns as received but would then send these returns back to the taxpayers without entering any data on the Master File that a return [or purported return] had been received. A form was attached to the original return indicated the flaw [missing schedule, lack of signature, etc.]. If the return was sent back with the requested information, the return would then be processed – possibly as of the original receipt date [at least if the flaw wasn’t lack of signature or other critical element under Beard].

    The biggest technical problem with this procedure was that some of the flaws that made the returns non-processible didn’t prevent the returns from constituting “filed returns” for purposes of starting the statute of limitations and for purposes of representing timely returns for various elections that had to be filed on timely returns. If for any reason the return never got back to the IRS [whether by mis-delivery going out or coming back, non-responsiveness by the taxpayer, etc.], there was no record that what might have been a valid “return” had actually been timely filed. I actually received the return of such a return for an estate or trust of which I was a fiduciary – I don’t remember the “flaw”, but I’m pretty sure the return was sufficient to constitute a “filed return” under applicable law.

    This issue was first raised at an IRS Northeast Region – Tax Lawyer Liaison Meeting in about 1996. The then Director of the Brookhaven Service center reported to the meeting that it wasn’t practicable for the IRS to correspond with taxpayers or even to record the receipt of such flawed returns, especially during filing season, when there was so much pressure on speedy processing [pre-efiling and scanning].
    Nancy Romano – now Area Counsel for SB/SE in Philadelphia – was an analyst at the time with Chief Counsel’s office in DC – Procedure & Administration. She agreed with me that the procedures should be changed. [I learned that after meeting Nancy when she was posted to Philadelphia.] Eventually, within the past 5 years or so, I think there was a summit meeting between SB/SE & W&I at which is was agreed that the procedure should be changed. This resolution was published by the IRS – I think as IMRS Issue #6 [or 2006-006].

    I haven’t read the opinion in the Deutsche Bank case, so I don’t know the precise facts as to whether or not the return there was sufficient to start the statute running. It isn’t clear to me whether every return that fails to meet the definition of “processible” in 6611(g) would also fail to constitute a “return” for statute of limitations and timely files election purposes.

    Ron Wiener
    267-765-0253rwiener@dscpas.com

    • Ron,

      Thanks for the really great comment. I have not done any research on the difference between “processible” forms under Section 6611(g) compared to other sections. I probably will, however, look into this over the next week or so, and, if I find anything interesting, I’ll add it to the blog. Thanks again. This is really great background information.

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