Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a nationwide law practice helping clients who have serious IRS problems. I’d like to share with you another client case study from the 1,000’s of tax clients we’ve represented.
Client Location: Marietta, GA
Client age: 40’s
Total tax debt: $160,000 to the IRS.
Case Details: IRS had done an audit.
Summary: Clients couldn’t find the information to prove their expenses. We were able to open the audit up and we believe we will
be able to show the IRS that their audit was wrong.
IRS resolution: We anticipate greatly reduce the tax liability.
A married couple in their late 40’s from Marietta, Georgia originally hired us to assist them with filing an Offer in Compromise. After reviewing their financial information, we discovered they did not qualify for an Offer. However, we noticed on their IRS Account Transcripts that IRS had assessed additional taxes for several years. Our clients told us they had no idea why additional taxes were assessed. We spoke with a local IRS Revenue Officer to obtain copies of the underlying paperwork on the additional taxes assessed. She could not help us so we contacted another IRS office. This second IRS office was able to provide us copies of a correspondence audit requesting proof of our clients’ basis in large family partnership losses. When we asked our clients for this information so we could request an audit reconsideration, they told us the information was simply not available. We all agreed that it would be best if we ended our representation at that time since there was nothing further we could do without the additional information.
Several years later, these same clients rehired us to file an audit reconsideration because they were able to locate documentation supporting their partnership basis. Our clients owed over $160,000 and the IRS had a part-pay installment plan paid through payroll deductions on the husband’s wages.
Our first step was to obtain a signed Forms 2848 and 8821 which allowed us to represent them before the Internal Revenue Service.
This audit reconsideration was more unusual than most because of the way the Internal Revenue Service handled the correspondence audit. A correspondence audit is an audit that is conducted by mail rather than you coming into an IRS office, or them coming out to your home or place of business.
The IRS is required to mail their letters to a taxpayer’s last known address by regular mail. In this case, the IRS mailed the correspondence audit to the taxpayers’ previous address. The IRS updates its address database one of two ways – when a taxpayer files a tax return with a new address or files Form 8822 Change of Address Notification. In this case the taxpayers had filed their current tax return with their new address six months earlier. The IRS did NOT send the correspondence audit to the taxpayer’s last known address!
This error on the IRS’ part extended the normal time frame in which the client was allowed to file a request for an audit reconsideration. All taxpayers must be provided with the opportunity to respond to a correspondence audit within three years. The mistake the IRS in regard to the addressing issue in this case gave these taxpayers an unlimited amount of time in which to rebut the audit changes.
We prepared the audit reconsideration and filed it with the IRS Examination Division. Months later we received a letter from the IRS rejecting the audit reconsideration because they thought it was filed too late. We appealed this ruling to the IRS Appeal Division who agreed with us and sent the audit reconsideration back to IRS Examination Division with instructions to process it. Again, months later we received another letter rejecting the audit reconsideration because the IRS said it was filed too late. Again, we appealed to the IRS Appeals Division who AGAIN agreed with our arguments and sent the audit reconsideration back again to the Examination Division.
We are now eight months into the most recent reconsideration period and our clients are understandably frustrated with the IRS bureaucracy . This is an example of how sometimes things are out of the control of either the attorney and the client.
We are confident we will win once the IRS Examination Division finally reviews the audit reconsideration paperwork, but dealing with them has not been easy.
What is the moral of this story? Never give up if you are right! Hire an experienced tax professional to work your tax case through the maze we call the Internal Revenue Service!
I hope this important client case study has helped you understand the IRS a little better and how tax problems are solved. Chances are you have questions or concerns about your own particular tax problem. I encourage you to pick up the phone and call me. I can answer your questions. Over the past 20 years I’ve represented clients in all 50 states and 29 foreign countries, and I welcome your call. You can reach me at the phone number on this video or by email at firstname.lastname@example.org. I’m Jeff Fouts and thanks so much for watching. Have a wonderful day.
TaxHelpAttorney.com Tax Law video No. 105538