Secrets of the IRS Account Transcript
By Morgan D. King,
of Morgan King Company & Morgan King Law Offices
Dublin, California
A
fundamental step in looking
at a possible IRS income-tax
discharge case is obtaining
and understanding the IRS Account
Transcript 1 for each year for which
taxes are owed. I venture to say getting
the transcripts is the sine qua non of
tax discharge. 2
Among other things, to be dischargeable
an income tax must satisfy 3 time
rules. In most cases the transcript will
typically identify these 3 critical dates; 3
1) The most recent date the tax
return was due to be filed or
“given” 4 by the taxpayer. 5
2) The date the client actually filed
or “gave” his/her tax return. 6
3) The date
assessed. 7
the
tax
was
Here are some issues that bear on
these 3 questions.
1. “Tax Per Return” on the account
transcript shows zero dollars.
The “Tax Per Return” appears on every
transcript, showing either ‘0’ or a dollar
amount. A zero with Tax Per Return
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CONSUMER BANKRUPTCY JOURNAL
is a clue that the taxpayer did not
file a tax return; had there been a $$
dollar amount shown with the “Tax Per
Return,” the figures almost certainly
came from the taxpayer’s filed 1040
tax return; hence, the taxpayer did in
fact file a return. But if there is no dollar
amount shown with “Tax Per Return,” it
is more likely that the return, if any, was
a substitute for return (“SFR”) filed by
the IRS, which is always blank (hence,
sometimes called a “dummy return).” 8
Caveat, the date shown on the
transcript at “Return Due Date or
Return Received Date -
and sometimes just “SFR”).
This language is misleading. The date
shown with code 150 is not the date the
return or SFR was filed, and represents
an assessment only if a $$ dollar
amount appears with the code 150.
Code 150 begins the transcript and if
the client’s filed tax return shows an
amount owed, the code 150 shows
the date the tax was assessed and the
amount.
8. Code 240
2. Code 150 This indicates other penalties codes
such as penalties for negligence or
late-filing, and similar non-criminal
offenses. 9 This indication may be
important because the penalties,
including penalties for fraud or evasion,
are dischargeable if the event triggering
the penalty happened more than 3
years before bankruptcy filing. 10
In the left column of the transcript will
be found the 3-digit IRS transaction
code no. “150.” Typically, code 150
contains the phrase “Return filed and
tax assessed.” Or, it may say Hence, filing within 3 years renders
the penalty non-discharged in the
bankruptcy. Penalties are also indicated
by other transaction codes such as
170, 180, 280, and 310.
“Substitute tax return prepared by IRS” 10. Code 275
Whichever is Later,” is the date a return
was filed for either the client’s 1040,
or an IRS SFR. That date is the actual
date the client’s return or the SFR was
filed, not the date shown with code 150,
discussed below.
Winter 2018
National Association of Consumer Bankruptcy Attorneys