IRS Incorrectly Asking Trustees for Form 1041-A

IRS Incorrectly Asking Trustees for Form 1041-A

News story posted in IRS Forms on 14 July 2009| 2 comments
audience: National Publication | last updated: 18 May 2011
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Summary

Beginning in 2007, Form 5227 was revised to incorporate the Form 1041-A filing requirement for split-interest trusts described in section 4947(a)(2).  Beginning with 2007, charitable remainder trusts, charitable lead trusts, and pooled income funds are no longer required to file Form 1041-A. Despite this change, the IRS has been issuing "Request for Your Tax Return" notices to some trusts for the Form 1041-A. Read on to find out why and what to do about it.

Full Text:

Beginning in 2007, Form 5227 was revised to include the Form 1041-A filing requirement for split-interest trusts described in section 4947(a)(2).  As such, beginning with 2007, charitable remainder trusts, charitable lead trusts, and pooled income funds are no longer required to file Form 1041-A. 

Despite this change, the IRS has been issuing "Request for Your Tax Return" notices to some trusts for the Form 1041-A which do not have the filing requirement. 

Based on informal discussions with the IRS, Bill Hranchak, CPA of Temo A. Arjani & Co., LLP, a Los Angeles-based accounting, charitable trust administration and software firm, learned the requests have been issued as a result of a programming error on their part which they are in the process of fixing.  Hranchak also reports that some of these requests do not even indicate as to which tax year or form number it was related to.  An IRS representative suggested that trusts which are only required to file the Form 5227 and have done so, should state this in their response to the request and also state that a Form 1041-A is not required to be filed.

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IRS Asking for Form 1041-A

We received about 10 of these notices - no tax year or form # listed on the notice. I called the IRS and learned it was form 1041A for the year 2007. I sent one letter to the IRS with a copy of each notice and a copy of their own instructions for 2007 highlighting the fact that this from was not needed any longer.

Form 1041-A

When I contacted the IRS, I was informed I needed to either fill out their form and to do what was stated in the article above, or I could call back in a week or so to see if the IRS had issued a notice recognizing their error and giving authority for them to accept your phone call as notification and then the charity wouldn't have to send back forms for all trusts in which they are trustee.

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