Beware Botched 1099-Bs, Form 8949 At Tax Time http://www.forbes.com/sites/greatsp...beware-botched-1099-bs-form-8949-at-tax-time/ Besides my Forbes blog above and interview in WSJ this past Sat, my partner Darren Neuschwander, CPA and I had a long interview today with Theresa Carey of Barron's. Ms. Carey writes the popular Electronic Investor column, and she just had the cover story this past week with her Annual Online Broker Review and Ratings. Our firm and some leading accounting industry groups want the IRS to back down on matching cost-basis reporting on the new beefed-up 1099s. New IRS Form 8949s are turning out to be a huge mess with large discrepancies in trying to reconcile correct trade accounting with botched 1099-B reporting. Mr. Neuschwander, CPA points out that it's like the prior controversy with the IRS over new 1099-K rules for reporting credit-card transactions. Due to blow back from the credit card and retailing industries, the IRS back tracked and said they would not match the 1099-Ks issued to tax returns. This will prevent an avalanche of inappropriate tax notices, alleging errors where none exist. That would otherwise be very disruptive to taxpayers. We want the same industry and media blow back, and back tracking from the IRS over their new 1099-Bs and Form 8949. Itâs unfair to blame this mess on the brokers alone. The IRS was very late in communicating the new rules and they never even told the brokers about the details of Form 8949, with the different parts for covered versus non-covered, and Parts A, B and C. The IRS did not require standardized reporting and they should. So, traders with different brokerage accounts are seeing very different applications, and that further confuses the issues. There are two types of problems. Wash sales are very botched and brokers should have gotten that much better. Even when wash sales are reported properly by a broker â which is not the case from what we see so far - itâs not 100% correct, because wash sale analysis must be done across all your brokerage accounts, including IRAs. We are concerned that many unsuspecting taxpayers may over pay their taxes based on broker-reported wash sales that are not correct. The second problem is botched 1099-Bs and discrepancies on Form 8949. If the IRS turns off the matching program, then I am less concerned with that problem. We need the brokerage industry and mediaâs help in getting this relief from the IRS. If we blame this all on brokers, they may go into their shell, and not help us as taxpayers and tax preparers. Our goal is to turn off the IRS computers on this matching, and to prevent the IRS from sending out TP-2000 notices to millions of taxpayers over 1099-B and Form 8949 matching errors. For sure, plan to file valid extensions, and let the dust settle on this huge mess, first. You donât want a refund that you later have to repay the IRS with interest and taxes, after a broker corrects a Form 1099-B later this year. You also donât want to pay taxes now that you donât owe. Plus, you donât want to dance this crazy dance on reconciling with botched 1099-Bs, when we expect brokers to fess up and fix this mess later on, too.