Examinations and Appeals Flashcards
What is the Assessment Statute Expiration Date (ASED)?
The IRS usually has 3 years from the later of the due date of the return or the actual filing date to assess additional taxes.
For dissolving corporations, a fiduciary can request a prompt assessment to shorten this time to 18 months.
What are the exceptions to the 3-year limit for tax assessment?
Exceptions include false or fraudulent returns, willful tax evasion, agreed extensions, and certain tax credits or foreign transfers.
What is a Notice of Deficiency?
The IRS sends a 30-day letter proposing tax changes, allowing the taxpayer to appeal. If the taxpayer doesn’t respond, a 90-day letter is sent, giving 90 days to file a petition with the Tax Court.
What is the Collection Statute Expiration Date (CSED)?
The IRS has 10 years from the date of tax assessment to collect unpaid taxes. Certain events can suspend or extend this period, such as bankruptcy proceedings, pending installment agreements, and offers in compromise.
Can a taxpayer refuse to extend the 10-year limit for tax collection?
Yes, but this may trigger IRS actions.
Does filing an amended return extend the statute of limitations?
No, filing an amended return does not extend the statute of limitations. If filed close to the ASED expiration, the IRS gets an extra 60 days to assess additional tax.
What authority does the IRS have to investigate?
The IRS can examine tax records, summon taxpayers, and gather evidence.
What rights do taxpayers have?
Taxpayers have the right to disagree with their tax bill, meet with an IRS manager, appeal most IRS actions, move their case to another IRS office for valid reasons, be represented during IRS dealings, and receive receipts for payments made.
What is the Freedom of Information Act (FOIA) in relation to taxpayers?
Taxpayers can request IRS records under FOIA by submitting a written request that includes a clear description of the records requested, a commitment to pay any fees, and proof of identity for personal tax records.
What is the Taxpayer Advocate Service (TAS)?
The TAS helps taxpayers resolve IRS issues when regular processes fail or when they face significant hardship.
Can the IRS contact third parties regarding a taxpayer?
Yes, the IRS can contact third parties but must notify the taxpayer first, with exceptions for criminal cases or risk of tax collection delays.
What are the two types of IRS audits?
The two types of audits are By Mail (Correspondence Audit) and In-Person (Field Examination).
What happens during a By Mail audit?
The IRS sends a letter asking for more information, and taxpayers can respond directly or through an authorized representative.
What happens during an In-Person audit?
Conducted by an IRS agent at the taxpayer’s business or office, taxpayers can represent themselves, bring someone for support, or have a representative act on their behalf.
What are the possible outcomes of an audit?
If no changes are proposed, the taxpayer receives a letter stating this. If changes are proposed, the taxpayer can agree, disagree, or appeal.
