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Taxpayer Bill of Rights (TABOR)

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Being contacted by an IRS revenue officer can be a frightful experience. To help taxpayers deal with IRS on a more equal footing, Congress passed, and President Reagan signed into law, the Taxpayer Bill of Rights (TABOR) in 1988. TABOR, which has been amended (or added to) twice since 1988, announced for the first time that taxpayers are guaranteed the right to consult with an attorney, CPA, Enrolled Agent, or other person any time the taxpayer is contacted by IRS. And, if requested by the taxpayer, IRS must suspend an interview of the taxpayer to afford him or her the right to consult a tax professional. TABOR also guarantees taxpayers the right to be represented before IRS by a properly authorized representative (i.e., attorney, CPA or enrolled agent). Once a taxpayer announces that he or she is represented by a tax professional, IRS is required to communicate with the representative, and not the taxpayer. Moreover, so long as representation continues, IRS cannot compel the taxpayer to attend meetings between his or her representative and IRS personnel unless an administrative summons is first served on the taxpayer.

Although these rights seemingly allow taxpayers to better manage interactions with IRS personnel, the Treasury Inspector General for Tax Administration found IRS revenue officers continue to make direct contact with taxpayers, even though it is known the taxpayers are represented by tax professionals. In a report publicly released today (October 1, 2012), TIGTA found that IRS revenue officers do not always involve taxpayers’ representatives appropriately during the collection process. To read TIGTA’s report on this topic, use this hyperlink: Read the report. To address this failure, TIGTA asked the Director, Field Collection, Small Business/Self-Employed, to take steps need to ensure future compliance.

At Authority Tax Service, we are committed to helping you deal with your tax matters. Whether it’s an audit of your business or personal return, or resolution of an outstanding tax obligation, our team of tax professionals has the knowledge and experience needed to represent your interests before IRS and the various state taxing authorities. And, we know your rights as a taxpayer, and will zealously defend and protect them during our dealings with IRS or state tax authorities.

If you have a tax matter you’d like to discuss with, don’t delay – contact Authority Tax Services now at 1-888-387-1760. We look forward to fighting for you!

 

Treasury Inspector General for Tax Administration

Press Release

October 1, 2012
TIGTA – TIGTA – 2012-50
Contact: David Barnes
(202) 622-3062
David.barnes@tigta.treas.gov
TIGTACommunications@tigta.treas.gov

IRS Employees Did Not Follow Guidelines on Contacting Taxpayers with Representatives, Report Finds

WASHINGTON – Internal Revenue Service (IRS) revenue officers did not always involve taxpayers’ representatives appropriately in taxpayer interactions during the collection process, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

The IRS has a number of policies and procedures in place to help ensure that taxpayers are afforded the right to designate a qualified representative to act on their behalf when dealing with IRS personnel in a variety of tax matters, the report found. However, TIGTA reviewed a statistical sample of Small Business/Self-Employed Division field collection investigations that were closed in FY 2011 and found that revenue officers were not always involving representatives appropriately in some key actions.

This audit was initiated because TIGTA is required to annually report on the IRS’s compliance with Internal Revenue Code Sections 7521(b) (2) and (c). The overall objective of this audit was to determine whether the IRS complied with the legal guidelines addressing the direct contact of taxpayers and their representatives.

TIGTA found that some revenue officers deviated from procedures by: 1) contacting the taxpayer directly, instead of the authorized representative, on the initial or subsequent contact in the collection investigation; 2) not sending copies of taxpayer correspondence to the authorized representative; or 3) not allowing enough time for the taxpayer to obtain a representative. In addition, little documentation was found in managerial reviews indicating that managers checked to ensure revenue officers were: 1) involving representatives in all case actions; 2) providing representatives a copy of all original correspondence sent to taxpayers; and 3) allowing taxpayers sufficient time to obtain representation.

Although none of the taxpayers involved formally complained to the IRS or to TIGTA, the deviations can negatively affect the taxpayers’ ability to obtain appropriate and effective representation during collection investigations. Moreover, these deviations can increase the risk of taxpayers seeking monetary damages from the IRS if its personnel are intentionally disregarding the direct contact provisions of the Internal Revenue Code.

“It is troubling that some IRS revenue officers deviated from longstanding procedures designed to protect taxpayers’ rights,” said J. Russell George, the Treasury Inspector General for Tax Administration.

TIGTA recommended that the IRS take steps to ensure that existing procedures designed to afford taxpayers their right to appropriate and effective representation are followed during the field collection process.

IRS officials agreed with TIGTA’s recommendation and plan to issue a memorandum reinforcing the need for Collection Field function personnel to follow the procedures and clarify the Internal Revenue Manual to include guidance for managers emphasizing the need to review for adherence to the procedures.

Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA’s internal review process to ensure that public release is in compliance with Federal confidentiality laws.

28th Annual UCLA Extension Tax Controversy Institute

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Wayne R. Johnson, Chief Executive officer of Authority Tax Services has been selected to moderate a panel on civil penalties at the 2012 UCLA Tax Controversy Institute

When: October 17, 2012 at the Beverly Hills Hotel

3:00 – 4:00      Civil Penalties – Taxpayer and Preparer, Yesterday and Today. Roundtable discussion among experienced practitioners regarding issues of good faith, reasonable cause and reliance or ignorance as a possible defense to civil penalties; use of Qualified Amended Returns, adequate disclosures,  penalty abatement considerations, and application of the Section 6676 penalty re claims for refund.  Moderator and Panelist: : Wayne R. Johnson of Wayne R. Johnson & Associates, PLC. Panelists:  Shenita L. Hicks, Director Examination, SB/SE, IRS; Michael J. Desmond, Law Offices of Michael J. Desmond, APC; Gary Gray, Deputy Associate Chief Counsel (Procedure and Administration), IRS, Washington, D.C. and Arthur J. (Kip) Dellinger, Jr., CPA, Cooper Moss Resnick Klein & Co. LLP

The IRS Could Increase Collections By Reducing the Time Between Balance Due Notices

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WASHINGTON — The Internal Revenue Service (IRS) could potentially collect additional revenue each year by reducing the time elapsed between notices it sends to taxpayers who owe taxes, the Treasury Inspector General for Tax Administration (TIGTA) concluded in a report publicly released today.

The IRS sends a series of balance due notices to taxpayers with unpaid tax liabilities. TIGTA determined that the first notice was the most effective notice, by a wide margin, because the first notice closed the most cases, collected the most money, and generated the most taxpayer responses.

Also, while the IRS allows 35 days between notices for the taxpayer to respond, TIGTA found that the time between notices can be reduced to reflect taxpayer response times. As these liabilities progress within the notice stream, the probability of collection diminishes. By reducing the time between sending notices by seven days, TIGTA estimated the notice stream could potentially collect an additional $363 million each year, although a study analyzing the impact of reducing the time would be needed to quantify the benefits. In addition, taxpayers could potentially save $1.8 million each year in interest payments.

TIGTA also found that the notice stream does not always treat taxpayers with more than one delinquency the same. As a result, the IRS may not use collection resources most effectively.

“The notice stream is the least costly of the IRS’s three-phase approach to collecting unpaid taxes,” said J. Russell George, Treasury Inspector General for Tax Administration. “While the notice stream collects billions of dollars in delinquent taxes annually, reducing the time between notices could potentially result in the collection of millions more. Further, if the IRS does not effectively pursue collection of unpaid tax through the notice stream, it could create an unfair burden on the majority of taxpayers who fully pay their taxes on time,” Mr. George added.

TIGTA recommended that the IRS consider reducing the time between each notice by seven days and establishing a business rule to address taxpayers with multiple balance due modules entering the notice stream at the same time. IRS officials agreed with the recommendations and said they are open to modifying the time between each notice, subject to budget constraints and programming issues. In their response, IRS officials also stated that 35 days between notices were necessary to process taxpayer inquiries and correspondence. In its report, TIGTA had noted the IRS has controls in place to prevent the next notice from being sent when taxpayers’ correspondence is being processed.

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