Revenooer Rants: Time remains to unravel that Roth IRA conversion
October 1, 2014
So you converted your "traditional" IRA to Roth IRA status in 2013 and now find, for any number of reasons, that you suffer from buyer's remorse, and wish you hadn't.
Not to worry — if you act before October 15, you have the ability to unwind the transaction. Instruct the custodian/trustee of the new Roth to send the dough back to the original (traditional IRA) custodian. If you have already filed your 2013 return, though, you may have to amend it.
And our friends at Spidell Publishing report that the California Franchise Tax Board will soon be stepping into the 21st century, and implement a system by which taxpayers and their representatives may elect to receive all communications and notices electronically rather than via "snail mail." Count on seeing more about this before the scheduled July 1, 2015 start date.
Eventually, the plan calls for the new system to cover all documents which would normally be mailed to the taxpayer, including:
• Notices, including the most infamous of all "Notice of Proposed Assessment"
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• More routine correspondence
The mechanics of all of this will include allowing folks and their representatives the ability to log into the taxpayer's MyFTB account and denote their favored form of communication, be it e-mail, text, or other FTB-approved alternative electronic method. Thereafter, any time a document has been placed into the taxpayer's electronic "mail box," he or she will be contacted in the favored way and alerted to access the document.
It will be interesting to see how this all works out – as noted by the Spidell folks, documents will be deemed "received" by the taxpayer on the date the electronic notification is sent and when the notice is viewable on MyFTB. But even if an email is bounced back, it will still be considered mailed.
We can hardly wait for the litigation which will ensue over this regimen, starting when the first taxpayer gets his hand slapped for not taking timely action because of some dispute over whether he did or didn't receive the instigating notification.
And from our "asleep at the switch" department comes word from our old friend, the Treasury Inspector General for Tax Administration (TIGTA) that IRS is leaving a bunch of dough on the table when it comes to going after tax deadbeats – seems the Revenooers are not always completely researching cases before closing them as uncollectible.
If IRS is unable to contact or locate a delinquent taxpayer, the collection case may be closed as currently not collectible. In Fiscal Year 2012, IRS closed over 483,000 of such cases, involving approximately $6.7 billion!
Out of a sample of 250 cases reviewed by TIGTA, there was no evidence that employees completed all of the required research steps for 57% of the cases prior to their closure!
"If the IRS does not take all of the required research steps prior to closing cases, there is increased risk that the Government's interest may not be protected and that taxpayers will not be treated equitably," quoth J. Russell George, the TIGTA himself.
CONSULT YOUR TAX ADVISER – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your particular situation. Jeff Quinn is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.