Audits Archives - Tax Resolution Specialist Training

Would you amend a tax return to use the 240 day rule?

To amend a return adds 240 ADDITIONAL days to the waiting period necessary to include tax liability in a bankruptcy so it would not make sense to amend a return for that reason. However, if your client had an IRS return audited and additional tax was assessed, you will probably want to amend the State [...]

Would you amend a tax return to use the 240 day rule?David Karp2017-04-11T22:23:04-07:00

How do you respond to IRS when they want client to extend the statute of limitations period?

If you are referring to the collection statute we instruct our clients not to sign a waiver. If you are talking about audit and not collections. Typically you do not have a lot of choice in the matter. If you do not extend the assessment period the IRS will disallow the deductions in question and [...]

How do you respond to IRS when they want client to extend the statute of limitations period?David Karp2017-04-11T22:23:04-07:00

I am an EA and a bookkeeper. I categorize expenses as a bookkeeper for one of my clients. I do not and will not prepare her taxes. She owns 30 rental properties and has instructed me to include some expenses that I know are not allowable tax deductions. She also does not capitalize certain expenses as should be the case but rather expenses them in the period in which they were incurred. I have brought these errors to her attention. From what I know (I do not have access to review her prior years tax returns), her tax liability is zero every year. Am I culpable for including inappropriate expenses on reports I send to her tax preparer? Can I, as the bookkeeper following my client’s instructions, be held accountable?

This is a tough question to answer. You are an enrolled agent so you are trained to “know better”. That may be the real issue here. As you already know the ultimate responsibility is on the taxpayer. You should at the very least indicate in writing to the preparer and copy the client that you [...]

I am an EA and a bookkeeper. I categorize expenses as a bookkeeper for one of my clients. I do not and will not prepare her taxes. She owns 30 rental properties and has instructed me to include some expenses that I know are not allowable tax deductions. She also does not capitalize certain expenses as should be the case but rather expenses them in the period in which they were incurred. I have brought these errors to her attention. From what I know (I do not have access to review her prior years tax returns), her tax liability is zero every year. Am I culpable for including inappropriate expenses on reports I send to her tax preparer? Can I, as the bookkeeper following my client’s instructions, be held accountable?David Karp2017-04-11T22:23:04-07:00

A taxpayer knows that they owe 5-years back taxes stemming in part from an audit of three of the 5 years. The balance owing is high and every subsequent year’s tax refund is hold due to the balances owing. The taxpayers are in financial hardship and have not received correspondence indicating final assessments or collection letters of any type. Do they need to wait for some type of notification prior to proceeding with the submission of an offer in compromise or can they proceed now?

If the original tax amounts as well as the FINAL tax audit assessments have posted the taxpayer can proceed with the submission of an offer in compromise. This information can be discovered by obtaining the taxpayer’s most current tax account transcripts. The taxpayer does not need to wait for additional correspondences such as collection letters.

A taxpayer knows that they owe 5-years back taxes stemming in part from an audit of three of the 5 years. The balance owing is high and every subsequent year’s tax refund is hold due to the balances owing. The taxpayers are in financial hardship and have not received correspondence indicating final assessments or collection letters of any type. Do they need to wait for some type of notification prior to proceeding with the submission of an offer in compromise or can they proceed now?David Karp2016-05-13T13:37:51-07:00

Can you explain how a taxpayer utilizes an offer in compromise doubt as to liability in lieu of an audit reconsideration? I have a new client that was audited for 2012 and 2013. I was going to request an audit reconsideration, but would like to know how the OIC doubt as to liability would work?

Effectively it is an audit re-consideration. You typically option the OIC doubt as to liability if all other appeal paths have been exhausted. For example if the 30 day and 90 day letters have been issued and the assessments are considered “final”. If this is not the case, a traditional audit reconsideration is the path [...]

Can you explain how a taxpayer utilizes an offer in compromise doubt as to liability in lieu of an audit reconsideration? I have a new client that was audited for 2012 and 2013. I was going to request an audit reconsideration, but would like to know how the OIC doubt as to liability would work?David Karp2016-05-13T13:37:22-07:00

A taxpayer was audited for a year in which they received a 1099 showing $176,000 in income. The tax preparer representing the taxpayer did not supply supporting documentation for the deductions shown on the return and dies before the audit starts. What can the taxpayer do if the documentation is not available and the audit is closed without deductions?

If an audit becomes final including having exhausted all “official” channels of appeal; and the taxpayer failed to provide documentation supporting to either lower an assessment of tax liability or eliminate an assessment of tax liability (i.e. by providing proof of deductions or substantiating non-income deposits), the taxpayer may still have options. In many cases, [...]

A taxpayer was audited for a year in which they received a 1099 showing $176,000 in income. The tax preparer representing the taxpayer did not supply supporting documentation for the deductions shown on the return and dies before the audit starts. What can the taxpayer do if the documentation is not available and the audit is closed without deductions?David Karp2016-05-13T13:36:54-07:00

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Would you amend a tax return to use the 240 day rule?

How do you respond to IRS when they want client to extend the statute of limitations period?

Can you explain how a taxpayer utilizes an offer in compromise doubt as to liability in lieu of an audit reconsideration? I have a new client that was audited for 2012 and 2013. I was going to request an audit reconsideration, but would like to know how the OIC doubt as to liability would work?

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