Taxes: Tax Practice & Procedure

Question 1

Taxes:
Tax Practice & Procedure
Audit Process

Answer 1

Audit Process

1. review of returns for error and matching info from W-2. All returns classified as individual, corporation, partnership, fiduciary, etc.
2. each return is scored
3. statute of limitations: 3 years from
   - date filed or
   - due date of return with 2 exceptions
   - 6 years if gross omissions >25% GI
   - no statue of limitations if fraud
4. audits conducted in IRS office of field
5. taxpayer may appoint qualified individual to represent them before IRS
6. IRS can summon taxpayer’s records & witnesses to testify
7. IRS findings reported in “Income Tax Exam Changes Report”
8. disagreements may arise from questions of fact or law
9. IRS will be consistent with sources of law
10. IRS and taxpayer can negotiate
11. if taxpayer agrees to “Revenue Agent’s Report”, no appeals
12. once deficiency paid, appeal through US District Court or US Claims Court
13. no agreement, get 30-day letter
14. IRS encourages taxpayer to agree to RAR
15. IRS Issues a no-change report after audit, then cannot reopen unless fraud

Question 2

Taxes:
Tax Practice & Procedure
Appeals Process

Answer 2

Appeals Process

1. written protest must be filed
2. must explain taxpayer’s position
3. IRS not required to grant appeal
4. new issues may not be raised by IRS during appeal
5. appellate conference is informal
6. if case is settled, form 870-AD is signed
7. if taxpayer does not respond to 30-day letter, 90-day letter is issued
8. taxpayer must file a petition with Tax Court
9. once petition filed, IRS cannot issue notice of deficiency