working with the irs chapter twelve organization of irs irs oversight board (rra’98) president...
Post on 22-Dec-2015
223 views
TRANSCRIPT
![Page 1: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/1.jpg)
Working with the IRS
Chapter Twelve
![Page 2: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/2.jpg)
![Page 3: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/3.jpg)
Organization of IRS
IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered
5-year terms Commissioner is standing member NTEU (IRS employee union) appoints one
standing member Recommends to President candidates for
Commissioner
![Page 4: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/4.jpg)
Organization of IRS (cont’d)
IRS Oversight Board (cont’d) Develops long term strategy Reviews and approves mission, strategic
plans, annual budget request As name implies, oversight of IRS No authority to affect tax policy of intervene
into IRS personnel or procurement matters
![Page 5: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/5.jpg)
Organization of IRS (cont’d)
Commissioner Political appointment 5-year term Member of IRS Oversight Board
Chief Counsel – also reports directly to Treasury, also a political appointment
Deputy Commissioner Criminal Investigation National Taxpayer Advocate Appeals Shared Services
![Page 6: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/6.jpg)
IRS Mission Statement
Provide America’s taxpayers top quality service by helping them understand
and meet their tax responsibilities and by applying the tax law with integrity
and fairness to all
![Page 7: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/7.jpg)
IRS Organization (cont’d)
Chief Counsel Political appointment Commissioner’s lawyer - agency’s highest
ranking legal advisor Reports to the Commissioner in.re.
Enforcement and administration of the tax laws Litigates disputed tax issues cases not
otherwise resolvable
![Page 8: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/8.jpg)
IRS Organization (cont’d)
Chief Counsel (cont’d) Writes
Regs Proposed legislation Tax Treaties Executive orders Revenue Rulings Private Letter Rulings
Etc.
![Page 9: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/9.jpg)
IRS Organization (cont’d)
Deputy Commissioner Operating Divisions
Large and Mid-Size Business – D.C. ($$) Small Business/Self-Employed – Atlanta ($$) Wage and Investment Income – D.C. ($$) Exempt-Organization and Government Entities –
D.C. ($$)
![Page 10: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/10.jpg)
IRS Organization (cont’d)
Note: The following no longer exist Regional offices / Regional Commissioner District offices – District Director
![Page 11: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/11.jpg)
Taxpayer Advocate
National Taxpayer Advocate Taxpayer intervention system Local Taxpayer Advocates Taxpayer Bill of Rights Form 911 - Taxpayer Assistance Order (TAO) On page 391, last paragraph under Taxpayer
Rights re. “confidentiality privilege,”
![Page 12: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/12.jpg)
Taxpayer Bill of Rights
Taxpayers guaranteed certain rights A recording of any administrative proceeding, after a
10-day request notice Transcript of administrative proceeding interview (at
TP’s expense) An explanation of IRS position on any administrative
matter it initiates May be represented by attorney, CPA, or other
person permitted to practice before IRS Etc.
![Page 13: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/13.jpg)
SEC. 7525. CONFIDENTIALITY PRIVILEGES
7525(a)(1) GENERAL RULE.--With respect to tax advice, the same common law protections of confidentiality which apply to a communication between a taxpayer and an attorney shall also apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney.
![Page 14: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/14.jpg)
SEC. 7525. CONFIDENTIALITY PRIVILEGES (cont’d)
7525(a)(2) LIMITATIONS.--Paragraph (1) may only be asserted in--
(A) any noncriminal tax matter before the Internal Revenue Service; and
(B) any noncriminal tax proceeding in Federal court brought by or against the United States.
![Page 15: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/15.jpg)
SEC. 7525. CONFIDENTIALITY PRIVILEGES (cont’d)
7525(a)(3)(A) FEDERALLY AUTHORIZED TAX PRACTITIONER.--The term "federally authorized tax practitioner" means any individual who is authorized under Federal law to practice before the Internal Revenue Service if such practice is subject to Federal regulation under section 330 of title 31, United States Code.
![Page 16: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/16.jpg)
SEC. 7525. CONFIDENTIALITY PRIVILEGES (cont’d)
7525(a)(3)(B) TAX ADVICE.--The term "tax advice" means advice given by an individual with respect to a matter which is within the scope of the individual's authority to practice described in subparagraph (A).
![Page 17: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/17.jpg)
SEC. 7525. CONFIDENTIALITY PRIVILEGES (cont’d)
7525(b) SECTION NOT TO APPLY TO COMMUNICATIONS REGARDING CORPORATE TAX SHELTERS.--
The privilege under subsection (a) shall not apply to any written communication between a federally authorized tax practitioner and a director, shareholder, officer, or employee, agent, or representative of a corporation in connection with the promotion of the direct or indirect participation of such corporation in any tax shelter (as defined in section 6662(d)(2)(C)(iii) ).
![Page 18: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/18.jpg)
Tax Practitioner Confidentiality Privilege
RRA’98 Extends attorney-client confidentiality
privilege in tax matters to non-attorney’s authorized to practice before the IRS
May be asserted only in noncriminal proceedings
![Page 19: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/19.jpg)
Tax Practitioner Confidientality Privilege (cont’d)
Confidentiality Privilege does not extend to: Preparation of tax returns Giving accounting or business advice Tax accrual workpapers
Be aware of it, use it with discretion
![Page 20: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/20.jpg)
Returns / Examination Division
Preliminary Review of Filed Returns Handled from service centers
Mathematical errors Not an examination “Deficiency procedure” not required No administrative remedy IRC §6213(b)(1)
Unallowable items Same as above
![Page 21: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/21.jpg)
Exam – Slight Diversion
The “IRM” (Internal Revenue Manual) Each Operating Division has one
Exam’s is Part IV Collection is Part V Appeals’ is Part VIII
Be familiar with it It is published, and is on IRS’s website – irs.gov It tells examiner’s how to conduct certain types of
audits
![Page 22: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/22.jpg)
The IRM
Preparing for an IRS Audit Handbook [4.2]3.2.1 “IRC §7521(c) states that
an examiner cannot require a taxpayer to accompany an authorized representative to an examination interview in the absence of an administrative summons. However, the taxpayer’s voluntary presence at the interview can be requested through the representative as a means to expedite the examination process.”
![Page 23: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/23.jpg)
The IRM
Handbook [4.2]3.2.1.4 2. “IRC §7602 allows examiners to obtain testimony from third parties who can provide relevant information to determine the correct liability for a taxpayer.
“3. Caution should be taken to not disclose any tax information of a confidential nature when contacts are made with third parties.”
![Page 24: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/24.jpg)
Preparing for an IRS Audit
Handbook [4.2]3.3.5 “1. An examiner may consider inspecting the taxpayer’s residence. Due to privacy issues and the intrusiveness of such inspections, their use should be limited. The purpose … includes (but is not limited to): B. Determining the taxpayer’s
financial status.”
![Page 25: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/25.jpg)
Preparing for an IRS Audit
Handbook [4.2]3.3 1. “The physical observation of the taxpayer’s operation, or tour of business site, is an integral part of the examination process.
![Page 26: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/26.jpg)
Preparing for an IRS Audit Examination Techniques
Handbook 4.3.2 Examination Collectibility
Handbook 4.3.21 Exam Offer-in-Compromise
Handbook 4.3.3 Excise Tax
Handbook 4.4.3 Retail Industry
Handbook 104.6 Employment Tax
Handbook 104.3 AIMS/Processing Handbook
Handbook 104.7 Financial Products and Transactions Handbook
![Page 27: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/27.jpg)
Preparing for an IRS Audit Anti-Money Laundering
Handbook §4.3.4 Anti-Money Laundering Handbook, Chapter 26, Role of the Examiner:
Sub§11.4.1 Review Currency and Banking Retrieval System (CBRS) for cash activity (Forms 8300 filed for cash deposits of $10,000 or more)
![Page 28: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/28.jpg)
Preparing for an IRS AuditAnti-Money Laundering (Cont’d)
Sub§11.4.3 1. Examiner should inspect cash receipts and sales journals, bank statements, and deposit slips to verify:
A. Cash receipts of more than $10,000.
B. Consecutive or related transactions which total more that $10,000.
![Page 29: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/29.jpg)
Preparing for an IRS AuditAnti Money Laundering (Cont’d)
Sub§11.4.3 2. The examiner should be alert to identify transactions that attempt to avoid the reporting requirements of IRC §6050I (Form 8300 requirements) by
A. (combining cash and non-cash to appear to avoid filing requirements)
B. (structuring a single transaction into multiple transactions).
![Page 30: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/30.jpg)
Market Segment Specialization
Program(MSSP)
![Page 31: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/31.jpg)
MSSP – Pizza Restaurants
“Because pizza restaurants are basically cash businesses, the potential for skimming exists. The type of entities discussed in this guide are the family owned mom and pop types of establishments.” (Not chains or franchises)
![Page 32: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/32.jpg)
MSSP – Pizza Restaurants
“Overall, documentation of income and expenses in this industry has been found to be lacking. … cash register tapes are not retained and income is not deposited intact. There is generally little or no documentation to verify gross receipts…… Purchases are often paid in cash … invoices are not kept. Employees are often paid in cash ……”
![Page 33: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/33.jpg)
MSSP - Ministers
(Totally changing gears)
MSSP
Ministers
![Page 34: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/34.jpg)
MSSP - Ministers
Although overall potential examination issues are prevalent, the guidelines consist more of a recitation of those potential issues resulting from the law applicable to ministers that differ from other individual taxpayers.
![Page 35: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/35.jpg)
MSSP - Attorneys
(Changing gears again)
MSSP
Attorneys
![Page 36: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/36.jpg)
MSSP - Attorneys
Purposes: “2. To increase voluntary compliance in
an area in which compliance was poor.”
![Page 37: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/37.jpg)
MSSP - Attorneys
Attorney-Client Privilege Attorneys may refuse to provide any documents
which contain client’s name. This can include a client list, general ledger, client ledger cards, cancelled checks, and client trust accounts.
Osterhoudt v. U.S., 722 f.2d 591 (9th Cir. 1983): “Thus, the general rule is that disclosure of client identity is not an infringement of the attorney-client privilege.
![Page 38: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/38.jpg)
Preparing for an IRS Audit MSSP
Example of other MSSP Papers: Architect Artists and Art Galleries Auto Body and Repair Bail Bond Bars and Restaurants Child Care Providers
![Page 39: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/39.jpg)
Preparing for an IRS Audit MSSP
Drywallers Garment Contractors Lawsuit Awards and Settlements Mortuaries Retail Liquor Taxicabs Veterinary Medicine
![Page 40: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/40.jpg)
MSSP
The MSSP papers also are all available online, on IRS’s web page: irs.gov
![Page 41: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/41.jpg)
![Page 42: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/42.jpg)
Exam
Selection of returns for audit Discriminant function (DIF) National Research Program, formerly
Taxpayer Compliance Measurement Program (TCMP) (“outlawed” by Congress)
Informant Economic Reality (also outlawed by
Congress)
![Page 43: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/43.jpg)
![Page 44: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/44.jpg)
Exam – selection of returns (cont’d)
Tax shelters Cash operations Abnormal deductions
![Page 45: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/45.jpg)
Exam
Audits –
> Correspondence examinations
> Office examination (generally being discontinued)
> Field examinations
(Dealing with the Internal Revenue Agent)
![Page 46: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/46.jpg)
![Page 47: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/47.jpg)
Audits (cont’d)
Conclusion of Audit Discussion of adjustments
Make sure the RA clearly explains the proposed adjustments and you understand
Don’t be reluctant to request a meeting with the Agent’s Manager if necessary – this is an acceptable procedure
Thirty-day letter / “Preliminary Notice” (also called a Revenue Agent’s Report (RAR)
Administrative procedure – not statutory
![Page 48: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/48.jpg)
![Page 49: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/49.jpg)
Audits (cont’d)
Options 1. Agree 2. File a protest (w/in 30days, or request
extension), request administrative appeal 3. Ignore, bypass Appeals, accept “Deficiency
Procedure” Then
Default SND, pay tax Default SND, pay tax, file suit in DC or CFC Petition Tax Court – w/in 90-Days (§6213) – NOT
THREE MONTHS
![Page 50: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/50.jpg)
Audits (cont’d)
Appeals Protests May be made orally or simple written request
if tax and penalties are under $2,500 per year Otherwise, must be in writing If proposed tax and penalties are over
$10,000, protest must be formal, setting out Specific facts, Applicable law, and/or Other authority, in support of position
![Page 51: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/51.jpg)
Audits (cont’d)
Remember, can request a hearing with TC’s Small Case Division if the deficiency and penalty (not interest) does not exceed $50,000 (per year). TP can appear pro se.
(Ceiling amount is statutory, but is increased occasionally by Congress)
![Page 52: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/52.jpg)
The Appeals Process
Reasons to take advantage of Appeals Process Very high rate of agreement May be able to obtain a favorable
“settlement,” or at least an acceptable one The judicial process is next
Very important – if ultimately litigated, will only be able to obtain recovery of litigation costs if: (next slide)
![Page 53: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/53.jpg)
Appeals Process Recovery of Litigation Costs
Requirements for recovery of litigation costs (IRC §7430): Petitioner has exhausted administrative
remedies Petitioner substantially prevails in litigation Government cannot prove its position was
substantially justified
![Page 54: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/54.jpg)
The Appeals Process
The Appeals Conference Evidence Law Strengths, weaknesses, precedents, reliability Hazards of Litigation Objective – if litigated, who will win this issue? Intermediate settlement
![Page 55: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/55.jpg)
The Appeals Process
In the absence of agreement here, Appeals will initiate the Deficiency Procedure
And then - the judicial process
![Page 56: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/56.jpg)
Appeals Process (cont’d)
Deficiency Procedure – Again, this is The Ninety-Day Letter – be aware, this is the Statutory Notice of Deficiency
Options – NOTE: Options are the same as before, except now you have exhausted your administrative remedies Agree Ignore – default the SND, pay tax Ignore – default the SND, pay tax, file suit in DC of CFC Petition Tax Court
![Page 57: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/57.jpg)
Assessment of Tax
Verify proper assessment Timely? Assessment Official Authority? Amount correct?
![Page 58: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/58.jpg)
The Collection Process
If you think the amount being collected is incorrect
Discuss with Revenue Officer, then don’t be reluctant to request meeting with RO’s Manager
Most Collection matters now may be appealed administratively
![Page 59: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/59.jpg)
Collection (cont’d)
Administrative Appeals:
> Liens on property
> Levies of wages or bank account
> Seizures or property
![Page 60: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/60.jpg)
CollectionLiens
A legal claim to your property as security for tax debt
Notice of Federal Tax Lien may be filed after Tax is assessed Notice of Demand for Payment (a bill) has
been sent, AND You have not paid the debt w/in 10 days
![Page 61: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/61.jpg)
Liens (cont’d)
Lien notice publicly notifies all creditors that IRS has claim against all your property, including property acquired after the filing
Lien attaches to all your property House Car Property rights (accounts receivable, etc)
![Page 62: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/62.jpg)
Liens (cont’d)
Appeal IRS must notify you w/in 5 business days after
filing of a lien You may ask for review by RO’s Manager You must file request for Appeal w/in 30 days
of notice
![Page 63: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/63.jpg)
Liens (cont’d)
Issues for discussion on appeal are limited:
> Taxes all paid before lien
> Tax assessed and lien filed while in bankruptcy subject to automatic stay
> Procedural error in assessment
> Statute for collection has expired
> Discuss collection options
> Spousal defences
![Page 64: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/64.jpg)
Liens (cont’d)
Release of the Notice of Federal Tax Lien will be (should be) issued Within 30 days after the debt is satisfied, or Within 30 days after IRS accepts a bond you
submit guaranteeing payment of the debt TP will have to pay state and/or other
jurisdictional fees will be added to amount owed
![Page 65: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/65.jpg)
CollectionLevies
Levy – a legal seizure of property to satisfy a tax debt Distinguished from lien in that property is
actually taken Property subject – car, boat, house, etc., or Property owned by TP but held by someone
else (wages, retirement account, bank account, licenses, CSV of life insurance, etc.
![Page 66: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/66.jpg)
Levies (cont’d)
Levy may take place after Tax is assessed and Notice and Demand for
Payment sent Tax not paid, and Final Notice of Intent to Levy and Notice of
Right to Hearing + 30 days
![Page 67: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/67.jpg)
Levies (cont’d)
Topics for discussion on appeal is same as for Liens.
![Page 68: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/68.jpg)
Levies (cont’d)
Levy on a bank account The bank must hold the money for 21 days to
give TP a chance to make other arrangements
After 21 days, the bank must send the money to IRS
![Page 69: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/69.jpg)
Levies (cont’d)
Release of Levy will be when/if Debt is paid Collection statute expired before levy was
filed Installment agreement approved, unless levy
is included Expense of selling the property would be
more than the tax debt
![Page 70: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/70.jpg)
Levies (cont’d)
Property will be released when/if Amount of government’s interest in property is
paid New escrow agreement Acceptable bond Acceptable agreement for paying tax Expense of selling the property is more than
debt
![Page 71: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/71.jpg)
Levies (cont’d)
Sale of Seized Property IRS must wait 60 days, during which
TP may ask that it be sold w/in 60 days Public Notice will be posted (local newspaper, flyer, etc.) Original of Notice to TP
After the Notice is placed, IRS must wait 10 days before sale (unless property is perishable)
IRS will compute a minimum bid price (generally 80% of forced sale value)
You may appeal the minimum bid price
![Page 72: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/72.jpg)
Levies (cont’d)
Proceeds of the sale If less than the tax bill and expenses of levy
and sale, you will still have to pay the unpaid tax
If more than the tax bill and expenses, surplus will be refunded
![Page 73: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/73.jpg)
Levies (cont’d)
Real Estate TP may redeem real estate w/in 180 days of
the sale Must pay purchaser the amount paid for the
property, plus interest at 20% annually (interest on the funds paid to the government by the purchaser)
![Page 74: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/74.jpg)
Levies (cont’d)
Property that cannot be seized: School books, certain clothing Personal and household effects, up to $6,250 Tools of trade, up to $3,125 Unemployment benefits Certain annuity and pension benefits Certain disability payments
![Page 75: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/75.jpg)
Levies - Property that Cannot be Seized (cont’d)
Salary, wages, or income included in a judgment for court-ordered child support
Certain public assistance payments Minimum weekly exemption for wages, salary,
and other income
![Page 76: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/76.jpg)
Collection (cont’d)
Opportunities for Relief Installment Agreement Offer in Compromise Temporary Delay in Collection Process
![Page 77: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/77.jpg)
Installment Agreement
< $10,000 - Automatic upon request > $10,000 – more troublesome, but is doable Will be an up front user fee (now $43) Interest and penalties will continue Beware – if miss payment, will be interest on
interest May be better to attempt loan at bank or by CC,
if available
![Page 78: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/78.jpg)
Installment Agreement
Note: If under threat of levy, upon application for installment, cannot levy While request for installment agreement is
being considered While appeal of rejection of installment
agreement is being evaluated For 30 days after rejection While installment agreement is in effect
(assuming payments are current)
![Page 79: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/79.jpg)
Offer in Compromise
May apply to Taxes Interest Penalties Additions to tax
![Page 80: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/80.jpg)
Offer in Compromise (cont’d)
Grounds for an offer Doubt as to liability (similar to establishing liability
amount under Exam or Appeals processes) Doubt as to collectibility (does TP have ability to pay) “promote effective tax administration” (assessed tax
is correct, but TP under economic hardship or other special circumstance)
![Page 81: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/81.jpg)
Temporary Delay in Collection
Temporary delay because of inability to pay currently Be aware that interest/penalties will continue During the delay, IRS may file a Notice of
Federal Tax Lien to “protect the government’s interest in your assets
![Page 82: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/82.jpg)
Trust Fund Recovery Penalty §6672
Also commonly known as 100% Penalty §6672 Penalty
![Page 83: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/83.jpg)
§6672 Penalty (cont’d)
Trust Fund Taxes – taxes withheld and held for employees until employer makes a federal tax deposit of them
Trust Fund Recovery Penalty – 100% of the trust fund taxes not paid over to government
Responsible person – person responsible for paying over the trust fund taxes to the government
![Page 84: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/84.jpg)
§6672 Penalty Responsible Person (cont’d)
If IRS determines you are the Responsible Person, they will issue you a Notice and Demand for Payment
Party determined responsible has 60 days to appeal
![Page 85: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/85.jpg)
§6672 Penalty Responsible Person (cont’d)
Officer or employee of the company Member or employee of a partnership Corporate director or shareholder Member of board of trustees of a nonprofit
organization Another person having authority and
control over funds to direct their disbursement
![Page 86: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/86.jpg)
§6672 Penalty Responsible Person (cont’d)
Responsible Person – willfully fails to collect or pay trust fund taxes.
Willfulness – Must have known about the unpaid taxes Must have used the funds for other purposes
![Page 87: Working with the IRS Chapter Twelve Organization of IRS IRS Oversight Board (RRA’98) President appoints Six members from private sector, staggered](https://reader035.vdocuments.net/reader035/viewer/2022062320/56649d785503460f94a5b526/html5/thumbnails/87.jpg)
Questions?