Responding to IRS Notices

Transcription

1 A Review of Various IRS Taxpayer Correspondence and Suggestions for Responding. Presented By: Leonard Steinberg, EA, CMC Steinberg Enterprises, LLC 1

2 Why Clients Receive Notices Mathematical Errors Income Omissions Trust Fund 941 Issues Non Response to Previous Notices Audit Selection (Correspondence) Can request face to face NRP (random) Identity Theft 2

3 Why Clients Receive Notices Liens and Levies Past Due Returns (SFRs) Installment Agreements Spousal Issues Penalties Accuracy Related, Estimated Tax, Failure to File, Failure to Pay, Failure to Deposit, Information Return, Return Preparer Penalties 3

4 Responding to Notices Which Offices Send IRS Notices IRS Campuses Automated Collection (ACS) Small Business Self-Employed Criminal Investigation Other? 4

5 Specific Notices CP2000 Summary of Proposed Changes DO NOT send an amended return CP14 Unpaid Taxes CP22A Changes to your 1040 CP49 Overpaid Tax Applied CP60 Changes to your 1040 CP89 This is Not a Bill CP259 Response Form for Form 941 CP503 Unpaid Taxes 5

6 Specific Notices CP504 Notice of Intent to Levy CP521 Monthly Installment Agreement LT16 Enforcement Action 2030 Proposed Changes Form 1120 CP3219A Notice of Deficiency Increase in taxes and right to challenge CP2005 Inquiry Closed 6

7 Specific Notices - Forms 668-D Release of Levy/Property 668-W Notice of Levy on Wages, Salary and Other Income Letter 3219 Notice of Deficiency Form 5564 NOD Waiver Form 4549 Income Tax Examination Changes Accompanying Schedules 4564 Information Document Request 7

8 Letters Selection at Random for a Compliance Research Examination (IDR required) Selection for a Full Audit (IDR required) Results of Examination Report Final Notice of Intent to Levy and Notice of Taxpayer s Right to a Hearing Response to a PLR 8

9 Letters Income Reporting Verification LTR 672 Application of Payments LTR 1962C Arrangements to Resolve Your Account LTR 2626C RE: Notice of Deficiency LTR 2273C Installment Agreement LTR 2645C IRS Needs More Time LTR 3217C Installment Agreement 9

10 Skills Needed Writing Statements of Facts Power of Persuasion Accounting Direct vs. Indirect Methods Cash vs. Accrual 10

11 Skills Needed Research Skills Rev Procs & Rulings, Notices, Audit Guides PLRs Tax Court Cases Even Temperament Not Subject to Intimidation Advocacy vs. Adversary Collaborative Effort Knowledge of Available Tools Forms and Communications 11

12 Skills Needed Communication Skills Interview the client Prepare a detailed questionnaire Anticipating questions (Audit, CDP Hearings, Appeals) Responding to IRS inquiries 12

13 Letter Format Date Full IRS Address Include Agents Name and/or Specific Office/Mail stop RE: Taxpayer s Name(s) Social Security/EIN Number Tax Year(s) Reference Number; Letter Number Specific Request 13

14 Letter Format Opening Paragraph Enclosures Always Include Copy of Signed 2848 Copy of All Materials Identify Taxpayer, SS#,EIN# on all materials Copy of the Notice Affidavits Appraisals Computations 14

15 Letter Format Facts and Circumstances Point by point only on those issues under consideration Relevant and Applicable IRS Code Citations Cite directly from IRM, Rev Procs, Revenue Rulings PLRs, Tax Court Cases 15

16 Letter Format Summary Paragraph Requested action to be taken by the IRS Please contact me for any additional requests of information, if required. Your cooperation and assistance are appreciated. Signature Signed under Submitted Power of Attorney CCs - Client(s), Attorney 16

17 Forms for the Practitioner 9465 Installment Agreement Request With the Tax Return 433-A Collection Information Statement for Wage Earners & Self-Employed 433-B Collection Information Statement for Businesses 433-D Installment Agreement Similar to the F Collection Information Statement 17

18 Forms for the Practitioner 911 Request for Taxpayer Advocate Service Assistance 8379 Injured Spouse Allocation 8857 Request for Innocent Spouse Relief 9423 Collection Appeal Request Within 2 business days Request for a Collection Due Process or Equivalent Hearing Request for Appeals Review Request for Appeal of OIC

19 Practice Management Engagement Letter Signed IRS Form 2848 Both Spouses Require Retainer Privacy Letter Maintain Mail, Phone Logs, Time on Task Send all correspondence using Certified/Return Receipt Send clients copy(ies) of all IRS Correspondence 19

20 Practice Management Errors and Omissions Insurance What to Do If You Don t Know or are Unsure of How to Respond Ask for Help 20

21 Resources NAEA NTPI Courses & Graduate IRS.gov IRM Part-4 Examination Part 5 - Collection Part 8 - Appeals Audit Techniques Guides Employed/Audit-Techniques-Guides-ATGs 21

22 Resources Software Tax Tools Tax Interest (accrued interest and penalties IRS is often wrong) Audit Detective Research Services American Bar Association Effectively Representing Your Client Before the 22 IRS

23 Resources US Tax Court Publications The Tax Advisor Journal of Tax Practice & Procedure NAEA Journals Other periodicals (Journal of Accountancy, Accounting Today, Forbes, Fortune, Barrons, etc.) 23