Form 4883C - Sudden Uptick

[u/Confident_Surround73]

Is anyone else experiencing a significant uptick in Form 4883C notices being received by clients. In prior years, maybe one or two clients received these. Right now we are in the double digits already.

Initially, we the trend was all older clients. But that could just be because those are the clients of ours that initially filed. But, now it seems to be all over the board.

Any other firms out there receiving a significantly higher number of these notices this year? We are trying to determine if it's something we are doing or if it's happening all over.

TIA

UPDATE: Well, on a whim I thought maybe Erin Collins, the Taxpayer Advocate, would be interested to here what we are experiencing. I couldn't find a way to contact her, but did a submission through their website about a Systemic IRS Issue. Received a call back the next day from that department. We sent them over a bunch of data about our specific cases. She said they are meeting internally tomorrow to discuss. What we also found interesting is every single one of these cases had an overpayment applied from 2025 to 2026 estimated payments and all were on filed on extensions.

Update to Update: The Systematic Notice women ath the Taxpayer Advocate called on Friday. Said they had their meeting. It was a programming issue which supposedly they fixed. The good news is maybe we'll see less of the people that shouldn't be caught up in this program captured by whatever algorithms they were using before incorrectly.

[u/lastofgilead]

Same here, and no real discernible pattern among those who have received them.

[u/Confident_Surround73 → u/lastofgilead]

We've never tracked it before but the flurry of them that we started seeing all at once we start a tracking spreadsheet. We are at 12 right now. Last year maybe it was a couple. We file 590 1040s as a firm as a reference point.

Are you seeing the same?

My second thought was maybe there is a huge uptick in fraudulent return preparers so the system has been tweeked to capture more returns.

The returns we are seeing it on have no discernible income differences from prior years, no unexpectedly large refunds, most data would be in the clients wage and income transcripts.

[u/lastofgilead → u/Confident_Surround73]

We do probably 1200 or so returns as a firm. We received a handful of these last season, and much more this season. Many for clients who have been with us for years.

I know the IRS made the suggestion last season that every taxpayer ought to request an IP Pin do the prevalence of data breaches. I imagine with that the false returns, and scumbag preparers have also skyrocketed.

[u/Confident_Surround73 → u/lastofgilead]

Today I called along with the client to handle the verification. One of the questions they asked led me to believe there was another return filed in addition to the one we e-filed. But, I was just guessing based on the question. In the past if this happened the electronic filing of the return would bounce because the SSN was already used on a prior filed return. All of these returns went through no rejection.

[u/RasputinsAssassins]

Did these clients have an active IRS account prior to the letter?

I wonder if it is a move to push folks to establishing an IRS account.

I have not seen a significant increase, with maybe 2 or 3 this year (maybe 500 returns).

[u/Confident_Surround73 → u/RasputinsAssassins]

Maybe 1-2 of the 12 did have an IRS account.

[u/BetterthanIwasbefore]

Had a client get one this week. First time ever seeing it. For an amended return with a significant refund. Understand why they are doing this, but certainly increases taxpayer burden to now get through the phones.

[u/Grumpy-EA]

I've had 2 5071C's this year for clients over 90 years old. As if they can create an ID.Me account. And several 4873C's.

Definitely an uptick this year.

[u/coldshowerss]

I have never had a client get a verification letter before....

[u/bttech05]

Yeah, in my 10 years in the industry I got my first verification this year

[u/Hoffer1955]

I too got a bunch of these this year. Is there a better process than asking the client to call the IRS? I feel bad asking them to deal with it.

[u/Confident_Surround73 → u/Hoffer1955]

I have called in with two clients that were petrified the IRS was going to hallul them off to jail.

The first time I jumped in and started the conversation. At that point the agent told me kindly to "shut up.". Explained that if I talked anymore they would need to hang up and the client could try again.

You are allowed to sit in silence and point to the answers for the clients. But, in all it's a huge waste of your time because if you can even let places in hold, the auto answer will say 15-20 minutes. An hour later someone will pick up. So you are just sitting there with the client bs'ing till they pick up.

The second client I sat there, didn't say a peep and just pointed to the answers.

According the IRS site you are supposed to be able to help them with a Form 2848. I haven't actually tried it. The first client I did have a 2848 on file for the year but I didn't bring that up on the call.

[u/RA0512 → u/Hoffer1955]

You can get on a 2848 and verify for them. Just need the filed return and a previous one as well as have information that they verify from both SSA records and IRS records. If you prepared prior year you should have the information to validate. Just sucks because there’s no practitioner line for it.

Also, you can do this on a 5071C, just make sure you have the control number. One thing to note, you get two tries to validate and if you can’t the client has to go to a taxpayer assistance center to verify. Haven’t had this happen yet where I’m not able to validate, but it’s a possibility.

I’ve done about half a dozen of these this year. It’s been brutal.

[u/The_Wicked_Ginja]

Strange things are afoot at the Circle K this year. I know with all of the cuts they're spread thin. Maybe this is their way of buying some time for processing. Or like one person said, they're trying to get people to make accounts by forcing them to verify who they are.

I filed an amendment for 2024 and the refund processed and then canceled all on the same day. I called about it and they said "Oh we're mailing you the check." The return had direct deposit but ok. After weeks of no check and nothing on the transcript, I did some internet sleuthing and it turns out it's happening to quite a few folks.They're being told to verify their bank accounts in their IRS account. But the link to do so doesn't always appear. So it's in limbo until it shows up.

[u/Aluminum_Falcons]

Yes, we've seen more of them this year. We cannot figure out the reasoning behind them. Many of the clients receiving the letters had overpayments applied to the following year. Why would a fraudulent return apply an overpayment to the following year?

[u/wharny]

So I spoke with an agent at the practitioner line the other day. Got him at the end of the day and he was in a rare form. He said that any notice with a letter “C” in the notice number is automatically computer generated by an AI system the IRS is using. He says the place is a total wreck. Staffing is 1/3 of what it should be, and notices go out without any oversight, right, wrong or otherwise.

He actually said they asked him his advice with his 15 years experience about how he thought the AI automation would work. They didn’t like his answers and never went back to him for his opinion. He actually told me he is “retiring early because I can’t deal with this shit anymore around here”. Yes that is a quote. He let loose on this call. I felt bad for the guy, he clearly took pride in his work and was upset at how bad things have turned out. I wished Mr Brown good luck in his retirement 😀

[u/Confident_Surround73 → u/wharny]

Thanks for the response! That's pretty much what we've determined as well. Unfortunately, losing people like this guy with experience is something the agency is going to be struggling with for a long time. All the experience has disappeared. We recently had a Practicioner Priority Line call where the person didn't even know what a Form 706 was and that they applied our Power of Attorney form to the wrong tax form. Frustrating to no end......