Understanding the IRS Notice Process

Transcription

1 Understanding the IRS Notice Process 287 The current lame duck commissioner of the IRS has promised from the inception of his tenure to clean up the IRS notice process 1

2 Understanding the IRS Notice Process Bonus TIGTA Audit Report IRS fails to adhere to its policy of providing quality and TIMELY response to notices The errors of the ways according to TIGTA: 1.Many responses initially failed to indicate any kind of account information only that IRS needed more time 2. Only 27% of taxpayers received timely responses that were meaningful 3. But of the cases sampled TIGTA found that IRS only answered 8% of notices in a timely AND accurate manner. 2

3 Understanding the IRS Notice Process 287 Change is on its way CADE2 rolls out for the 2011 tax filing season on 12/31/2011 IRS says that ALL existing balances transferred and balanced to the penny If CADE2 works the notice process will change as IRS deals with real time data 3

4 Understanding the IRS Notice Process In 2009 IRS issued Tax Tip indicating how a taxpayer should respond to a notice Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry. 4

5 Responding to the Notice Calm your client Identify the request 5

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7 Responding to the Notice

8 292 Responding to the Notice Present course of action 8

9 293 Consider Responding to the Notice Disclosure Authorization Form 2848 Statements not acceptable Not able to advocate for your client NO copies of responses Provide copy at every opportunity You may have to fight for your authorization 9

10 293 The Process Responding to the Notice Review the Original/Amended Return Carefully review IRS transcripts as they compare to your taxpayer s return Explain issues Provide simple, concise and complete explanations of issues without making accusations or pointing out blame Provide copies of originals BUT remember to indicate they are copies 10

11 295 Understanding the Notice Indentify the intent of the notice 11

12 295 Understanding the Notice 12

13 I. IRS Notices - INTENT Basic Tools for Tax Professionals Many pages on the IRS web site are best located by using the search irs.gov 13

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23 Understanding the Notice 298 Quantify the urgency of the response

24 298 Understanding the Notice What tax are they trying to collect and how much? 24

25 Understanding the Notice 299 Get the Caller ID to facilitate phone contact

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29 Understanding the Notice 303-Bonus 29

30 303 Automated Under Reporter (AUR) CP 2000 The most revenue productive program ever conceived by the IRS getting bigger every day 30

31 303 Automated Under Reporter (AUR) IRM Instructs IRS employees regarding analysis and processing 1. Avoid auditing returns 2. Selected AUR returns have already been screened for audit potential 31

32 304 Automated Under Reporter (AUR) IRM Instructs IRS employees regarding analysis and processing It is not necessary to verify everything Taxpayer s explanation are generally to be taken at face value Exam issues that are discovered during the process require the approval of exam 32

33 304 Automated Under Reporter (AUR) Responding to CP 2000 Not a notice of assessment DO NOT FILE FORM 1040X Submission of 1040X will unnecessarily delay case resolution Try to follow the instructions given by IRS as literally as possible 33

34 305 Insert Here Detail Section of 1040X 34

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36 307 Automated Under Reporter (AUR) 36

37 Should Form 1040 X Be Filed in Response to a CP IRS says NOT TO FILE FORM 1040X unless requested by IRS personnel By business rules the submission of a Form 1040 X requires a review by exam So choose wisely In its FAQs IRS indicates that submitting a Form 1040X will slow down the process SOLUTION Submit forms that need to be changed from original filing with response. 37

38 309 Abe Carnow Easy Life Bum Beach, CA

39 310 Automated Under Reporter (AUR) Responding to CP 2000 Response should be delivered by CERTIFIED MAIL or fax to the address or fax number indicated on the ORIGINAL CP

40 310 Automated Under Reporter (AUR) BEST IRC 7502 Defines delivery by registered, certified, or electronic return transmitter, NO FAX REGULATIONS TAKE YOUR CHANCES 40

41 310 Automated Under Reporter (AUR) The failure to respond and explain variances will lead to a 90 day letter (Stat Notice) Using practitioner resources to solve CP-2000 problems NO TO E-SERVICES NO TO PRACTITIONER PRIORITY SERVICE NO TO TAXPAYER ADVOCATE 41

42 310 Automated Under Reporter (AUR) All those CP-2000 notices that arrive during filing season Contact should be made to the IRS within thirty days from notice ALWAYS SEND A COPY TO YOUR CLIENT OF YOUR RESPONSE TO THE IRS 42