IRS clarifies use of Leave and Earnings Statements

The Internal Revenue Service (IRS) has published further clarification and guidance regarding the use of Leave and Earnings Statements when electronically filing tax returns. Although income tax returns may be prepared using a Leave and Earnings Statement or other documentation of income and federal tax withholding, the return must not be electronically filed prior to the Electronic Return Originator (ERO) receiving the related Form W-2, W-2G, or 1099-R.

A Form 4852 may be used only if the taxpayer can not obtain and provide a correct Form W-2, W-2G, or 1099-R. The Form 4852 must be completed in accordance with existing instructions. These instructions are available at TeleTax Topic 154 or can be accessed by calling TeleTax on 1-800-829-4477 and selecting Topic 154.

The non-standard W-2 indicator must be included in the electronic record if Form 4852 is used. EROs must retain Forms 4852 in the same manner as Forms W-2, W-2G, and 1099-R are required to be retained. EROs must never advertise that returns may be electronically filed prior to the receipt of Forms W-2, W-2G, and 1099-R as EROs are prohibited from electronically filing returns without Forms W-2, W-2G, and 1099-R except as stated above.

Any violation of these rules will result in sanctioning of the ERO as described in Revenue Procedure 2000-31, published July 31, 2000, in the Internal Revenue Bulletin, 2000-31.

Edited by Bob Arguero, Managing Editor, GovCon