tag:blogger.com,1999:blog-45932307081056160482024-03-19T07:44:38.426-05:00Tax Controversy UpdateThis blog deals with IRS tax controversies and is sponsored by Larry Jones. Unknownnoreply@blogger.comBlogger151125tag:blogger.com,1999:blog-4593230708105616048.post-978521538212647652014-07-21T09:12:00.001-05:002014-07-21T09:12:15.834-05:00<div class="MsoNormal" style="margin: 1.45pt -1pt 0.0001pt 58.7pt; text-align: center;">
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The IRS has issued a new memorandum <a href="http://www.irs.gov/pub/foia/ig/spder/AP-08-0714-0004%20REDACTED%5B1%5D.pdf">here</a> with respect to what the IRS call AJAC. This is memorandum states:</div>
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The purpose of this memorandum is to provide guidance to Appeals employees pertaining to the second phase of implementation of the AJAC Project recommendations with respect to Examination cases worked in Appeals and general matters.</div>
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The AJAC Project is reinforcing Appeals’ quasi-judicial approach to the way it handles cases, with the goal of enhancing internal and external customer perceptions of a fair, impartial and independent Office of Appeals.</div>
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The attachments to this memorandum provide guidance pertaining to all Appeals employees who open/close cases and hold hearings, conferences or otherwise resolve open case issues in the affected Examination work streams in Appeals.</div>
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For practitioners who deal with Appeals, careful attention should be given to these changes.</div>
</span>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-4593230708105616048.post-30052381436445616612014-06-27T08:00:00.000-05:002014-06-29T15:19:15.809-05:00<div style="text-align: center;">
<span style="font-size: large;"><span class="Apple-tab-span" style="white-space: pre;"> </span><span style="font-family: Arial, Helvetica, sans-serif;"><b>Keeping Records - It Is Important</b></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: large;">In a recent Tax Court decision, <a href="https://www.ustaxcourt.gov/InOpHistoric/GarzaMemo.Cohen.TCM.WPD.pdf" target="_blank">here</a>, Garza v. Commissioner, T.C. Memo. 2014-121, the Tax Court found that the taxpayer was not entitled to deduct unreimbursed employee expenses.</span><br />
<span style="font-family: Arial, Helvetica, sans-serif; font-size: large;"><br /></span></div>
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<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The taxpayer was an outside salesperson who was required to use his own vehicle in his work, but was not reimbursed for his expenses. He tried to deduct these expenses.</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The taxpayer did not maintain a separate log for his mileage. Rather, the taxpayer maintained his records on his calendar. </span></span><br />
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">Taxpayer would record his odometer mileage in a calendar at the beginning of each month. When the taxpayer filed his 2010 tax return, he deducted $24,048 in mileage expense and meals and entertainment. He alleged that he had driven 40,171 business miles. The taxpayer conceded that some of these miles were commuting miles.</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The law is clear that a taxpayer must keep records to support the amounts reported on a tax return. Section 6001 of the Internal Revenue Code; Treas. Reg. Sec. 1.6001-1(a), (e).</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The Tax Court in Garza stated:</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">A taxpayer must substantiate deductions by keeping and producing adequate records that enable the Commissioner to determine the taxpayer’s correct liability. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), aff’d per curiam, 540 F.2d 821 (5th Cir. 1976); Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 (1965).</span></span><br />
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">When a taxpayer establishes that he or she paid or incurred a deductible expense but fails to establish the amount of the deduction, the Court normally may estimate the amount allowable as a deduction. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930); Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985). There must be sufficient evidence in the record, however, to permit the Court to conclude that a deductible expense was paid or incurred in at least the amount allowed. Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957). Furthermore, deductions for certain expenses are subject to strict substantiation requirements, and an allowance therefore may not be estimated by the Court. The expenses in issue here fall within that category. See, e.g., Schladweiler v. Commissioner, T.C. Memo. 2000-351, aff’d, 28 Fed. Appx. 602 (8th Cir. 2002).</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The taxpayer in Garza failed to follow the rules in Section 274(d) of the Code which require certain substantation requirements. </span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The Tax Court further stated:</span></span></div>
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<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">As relevant here, the term “listed property” includes passenger automobiles such as petitioner’s truck. See sec. 280F(d)(4)(A)(i). To satisfy the requirements of section 274(d), a taxpayer generally must maintain adequate records or produce sufficient evidence corroborating his own statement, establishing the amount, date, and business purpose of each expenditure or business use of property. Sec. 1.274-5T(b)(6), (c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985).</span></span></div>
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<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">The Tax Court found that while the taxpayer did have business expenses in relation to his employment, but he did not keep the required records as required to support a deduction.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">In addition the Tax Court said:</span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">that “adequate records” generally consist of an account book, a diary, a log, a statement of expense, trip sheets, or a similar record made at or near the time of the expenditure or use, along with supporting documentary evidence. The strict substantiation requirements of section 274(d) for vehicle expenses must be met even where the optional standard mileage rate is used. Sec. 1.274-5(j)(2), Income Tax Regs.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">Even though the taxpayer in Garza had business expenses, his failure to follow the requirements of Section 274(d) of the Code allowed the Tax Court to disallow the deductions claimed.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">While this seems somewhat of an unfair result, the Tax Court followed the Code and Regulations. Had the taxpayer been more detailed in his record keeping, it is likely he would have been allowed the deduction. His excuse that it was “too much to do,” did not get him the deduction.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><span class="Apple-tab-span" style="font-family: Arial, Helvetica, sans-serif; white-space: pre;"><br /></span></span>
<span style="font-size: large;"><span style="font-family: Arial, Helvetica, sans-serif;">Clients need to be made aware of the requirements of recordkeeping for their business expenses. See Baker v. Commissioner, </span><a href="http://ustaxcourt.gov/InOpHistoric/BakerMemo.Ruwe.TCM.WPD.pdf" style="font-family: Arial, Helvetica, sans-serif;" target="_blank">here</a><span style="font-family: Arial, Helvetica, sans-serif;">, where a truck driver who lost his records proved his expenses with estimates.</span></span></div>
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<span class="Apple-tab-span" style="white-space: pre;"><span style="font-family: Arial, Helvetica, sans-serif; font-size: large;"> </span></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: large;">See Baker v. Commissioner, TC Memo 2014-122, where a truck driver who lost his records proved his expenses with estimates.</span></div>
Unknownnoreply@blogger.comtag:blogger.com,1999:blog-4593230708105616048.post-42034866711610683692014-02-21T08:38:00.000-06:002014-02-21T08:38:43.658-06:00The DIrty Dozen for 2014<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The Internal Revenue Service today issued its “Dirty Dozen”, <a href="http://www.irs.gov/uac/Newsroom/IRS-Releases-the-%E2%80%9CDirty-Dozen%E2%80%9D-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List" target="_blank">here</a>, list of tax scams for 2014 and has reminded taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Dirty Dozen lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.</span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">"Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen. “These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-82983203532421525602014-02-17T07:48:00.001-06:002014-02-17T07:52:21.339-06:00<div style="text-align: center;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: large;"><b>IRS Helpful Links</b></span></div>
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<b style="font-family: Arial, Helvetica, sans-serif;">Find Tax Exempt Organizations</b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-tab-span" style="font-weight: bold; white-space: pre;"> </span>This <a href="http://www.irs.gov/uac/SOI-Tax-Stats-Exempt-Organizations-Business-Master-File-Extract-(EO-BMF)" target="_blank">link</a> will take you to all of the states and a list of the tax exemption organizations that have been approved by the IRS.</span></div>
<div style="text-align: center;">
<span style="font-family: Arial, Helvetica, sans-serif;"><b>IRS Service Guide</b></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-tab-span" style="white-space: pre;"> </span>The IRS has published a Service Guide that has a number of helpful list. You will find the list <a href="http://www.irs.gov/pub/irs-pdf/p5136.pdf" target="_blank">here</a>.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b><br /></b></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b></b></span></div>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-19127968384811658862014-01-17T13:50:00.000-06:002014-01-17T13:51:26.315-06:00Downloads from the IRS <div align="center" style="text-align: center;">
<span style="font-size: 14pt;"><strong>Downloads from the IRS</strong></span> </div>
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<span style="font-size: 12pt; text-align: justify;">Taxpayers can now download their tax returns and other documents from the IRS. See<a href="http://www.irs.gov/Individuals/Get-Transcript" target="_blank"> </a></span><a href="http://www.irs.gov/Individuals/Get-Transcript" target="_blank"><span style="color: blue; font-size: small;">here</span> </a>to<span style="font-size: 12pt; text-align: justify;">:</span></div>
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<span style="font-size: 12pt; text-align: justify;"></span><br />
<ul><span style="font-size: 12pt; text-align: justify;">
<li>View and print your transcript immediately.</li>
<li>Choose among <a href="https://www.blogger.com/blogger.g?blogID=4593230708105616048" shape="rect">Tax Return</a>, <a href="https://www.blogger.com/blogger.g?blogID=4593230708105616048" shape="rect">Tax Account</a>, <a href="https://www.blogger.com/blogger.g?blogID=4593230708105616048" shape="rect">Record of Account</a>, or <a href="https://www.blogger.com/blogger.g?blogID=4593230708105616048" shape="rect">Wage and Income</a> transcripts or a <a href="https://www.blogger.com/blogger.g?blogID=4593230708105616048" shape="rect">Verification of Nonfiling Letter</a>.<span style="font-size: 12pt;"> </span></li>
</span></ul>
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</span></div>
<div align="justify" style="margin-left: 30px; text-align: justify;">
<span style="font-size: 12pt;">Go<a href="http://search.irs.gov/search?as_sitesearch=www.irs.gov/Individuals&q=transcript&output=xml_no_dtd&proxystylesheet=irs_portals_frontend&client=irs_portals_frontend&oe=UTF-8&ie=UTF-8&num=10&ud=1&exclude_apps=1&site=default_collection&numgm=5&requiredfields=-archive:1&&access=p&sort=date:D:L:d1&entqr=3&entqrm=3" target="_blank"> </a></span><span style="color: blue; font-size: small;"><a href="http://search.irs.gov/search?as_sitesearch=www.irs.gov/Individuals&q=transcript&output=xml_no_dtd&proxystylesheet=irs_portals_frontend&client=irs_portals_frontend&oe=UTF-8&ie=UTF-8&num=10&ud=1&exclude_apps=1&site=default_collection&numgm=5&requiredfields=-archive:1&&access=p&sort=date:D:L:d1&entqr=3&entqrm=3" target="_blank">here</a></span> <span style="font-size: 12pt;">for specific instructions.</span><span style="color: #02160c; font-size: 12pt;"> </span></div>
<span style="background-color: white; color: black; font-family: Times New Roman; font-size: small; text-align: justify;"></span><span style="background-color: white; color: #02160c; font-family: Arial, Helvetica, sans-serif; font-size: 10.909090995788574px; text-align: justify;"></span><br />
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-41462345142471121752014-01-12T13:36:00.002-06:002014-01-12T13:36:55.912-06:00<div style="text-align: center;">
<span style="font-family: Arial, Helvetica, sans-serif;"><b>Reporting Suspected Tax Fraud</b></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b><br /></b></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">There are times when it may be necessary to report tax fraud, stolen identity, or some other matter to the IRS. A summary of how to make these reports and forms to use can be found <a href="http://www.irs.gov/Individuals/How-Do-You-Report-Suspected-Tax-Fraud-Activity%3F" target="_blank"> here</a>.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-24140355571655773642013-08-26T07:10:00.003-05:002013-08-26T07:10:48.257-05:00IRS Processing Codes and Information - 2012<span style="font-family: Arial, Helvetica, sans-serif;">The IRS has published IRS Processing Codes and Information - 2012. This is a good source of information. The ADP Book (Doc 6209), as it is known, can be found <a href="http://www.irs.gov/uac/Document-6209-%E2%80%93-2012-Edition">here</a>. </span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-77231689843265998832013-01-04T08:26:00.001-06:002013-01-04T08:26:24.607-06:00IRS Releases New Form 433-A and 433-B
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<b><span style="color: black; font-family: "Arial","sans-serif";"><a href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Headliner-334"><span style="color: blue;">Collection
Information Statements Revised</span></a></span></b></div>
<br />
<div style="background: white; margin: 0in 0in 0pt;">
<span style="color: black; font-family: "Arial","sans-serif";">The IRS revised two forms
used when obtaining financial information to determine how taxpayers can settle
their tax liabilities: <a href="http://www.irs.gov/pub/irs-pdf/f433a.pdf">Form 433-A</a> and <a href="http://www.irs.gov/pub/irs-pdf/f433b.pdf">Form 433-B</a>. An updated Publication
1854 and a new Publication 5059 are also available. See more<a href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Headliner-334"> here</a>.<o:p></o:p></span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-88543110138607745092013-01-04T07:56:00.000-06:002013-01-04T07:56:49.876-06:00IRS Releases New Withholding Guidance for 2013
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<div style="background: white; margin: 0in 0in 0pt;">
<span style="color: black; font-family: "Arial","sans-serif";"><a href="http://www.irs.gov/uac/Newsroom/IRS-Provides-Updated-Withholding-Guidance-for-2013"><b><span style="color: blue;">IRS
Provides Updated Withholding Guidance for 2013</span></b></a><br />
IR-2013-1, Jan. 3, 2013 — The IRS released updated income-tax withholding
tables for 2013 reflecting this week’s changes by Congress. See <a href="http://www.irs.gov/uac/Newsroom/IRS-Provides-Updated-Withholding-Guidance-for-2013">here</a>.</span></div>
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<span style="color: black; font-family: "Arial","sans-serif"; font-size: 8pt;"><o:p><span style="font-family: Times New Roman; font-size: small;"> </span></o:p></span></div>
<br />
<div style="background: white; margin: 0in 0in 0pt;">
<span style="color: black; font-family: "Arial","sans-serif";"><a href="http://www.irs.gov/uac/Newsroom/IRS-Provides-Guidance-on-Withholding-in-2013"><b><span style="color: blue;">IRS
Provides Guidance on Withholding in 2013</span></b></a><br />
IR-2012-105, Dec. 31, 2012 — The IRS released new income-tax withholding tables
for 2013 and issued special instructions on implementing new income tax and
Social Security tax rates. See <a href="http://www.irs.gov/uac/Newsroom/IRS-Provides-Guidance-on-Withholding-in-2013">here</a>.<o:p></o:p></span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-44341019408321696422012-02-29T13:40:00.001-06:002012-02-29T13:40:21.334-06:00Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-1695793292913419412012-02-28T10:17:00.004-06:002012-02-28T10:21:23.000-06:00Questions and Answers on the PTIN - Do You Need a PTIN?The IRS has published guidance on PTINs. See the guidiance <a href="http://www.irs.gov/taxpros/article/0,,id=239678,00.html">here</a>.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-64246029984063469362012-02-27T07:38:00.000-06:002012-02-27T07:38:26.881-06:00Ex Parte Communications Between Appeals and Other IRS EmployeesThe IRS has issued Rev. Proc. 2012-18 concerning Ex Parte Communications. The Rev. Proc. can be found <a href="http://www.irs.gov/pub/irs-drop/rp-12-18.pdf">here</a>. Practitioners should be aware of their rights and that of their clients concerning any ex parte communications between Appeals and other IRS employees.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-91828568247898862182012-01-16T10:53:00.000-06:002012-01-16T10:53:05.307-06:00NEW IRS LINK FOR IDENTITY THEFT<div style="text-align: justify;">The IRS has taken numerous steps to combat identity theft and protect taxpayers. The IRS is continually looking at ways to increase data security and protect taxpayers' identities with assistance from the IRS Identity Protection Specialized Unit. </div><div style="text-align: justify;">Here is a <a href="http://www.irs.gov/privacy/article/0,,id=186436,00.html?portlet=111">link</a> for more information.</div><br />
<div style="text-align: justify;"><br />
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-1580371812275055482011-09-21T13:26:00.000-05:002011-09-21T13:26:41.384-05:00Special Procedure as to Expert Testimony<div style="text-align: justify;"><span style="font-family: 'Calibri','sans-serif'; font-size: 11pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="font-family: Arial, Helvetica, sans-serif;">With the agreement of the parties, the Tax Court directed the experts to testify concurrently. To implement the concurrent testimony, the Court sat at a large table in the middle of the courtroom with all three experts, each of whom was under oath. The parties' counsel sat a few feet away. The Court then engaged the experts in a three-way conversation about ultimate issues of fact. Counsel could, but did not, object to any of the experts' testimony. When necessary, the Court directed the discussion and focused on matters that the Court considered important to resolve. By engaging in this conversational testimony, the experts were able and allowed to speak to each other, to ask questions, and to probe weaknesses in any other expert's testimony. The discussion that followed was highly focused, highly structured, and directed by the Court. See Rovakat LLC et al. v. Commissioner; T.C. Memo. 2011-225 (Judge Laro). See the opinion </span><a href="http://ustaxcourt.gov/InOpHistoric/Rovakat.TCM.WPD.pdf"><span style="font-family: Arial, Helvetica, sans-serif;">here</span></a><span style="font-family: Arial, Helvetica, sans-serif;">.</span></span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-43328448841531204722011-07-25T07:26:00.000-05:002011-07-25T07:26:52.537-05:00Watch the Statute of LimitationsIn tax controversy matters is it important to be aware of the statute of limitations. Set forth below are some basic rules for dealing with the statute of limitations (SOL). The references are to the applicable sections of the Internal Revenue Code.<br />
<div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><strong>A. General Rules</strong> </div><div style="text-align: justify;"> 1. SOL - The IRS has 3 years from the time the tax return is filed to assess. Section 6501.</div><div style="text-align: justify;"> 2. Notice and Demand- Upon an assessment being made, the IRS has 60 days to notify the taxpayer of the assessment and demand the amount assessed. Section 6303(a).</div><div style="text-align: justify;"><strong>B. Determination of the SOL</strong></div><div style="text-align: justify;"> 1. Due Date - The due date of an individual return is April 15th (or the following Monday if April 15th falls on a Saturday or Sunday). Section 6072(a). </div><div style="text-align: justify;"> 2. When a Return is Deemed Filed - Sections 6501(b) and 7502(a) (2).</div><div style="text-align: justify;"> a. A return filed on or before the due date is deemed filed as of the due date.</div><div style="text-align: justify;"> b. A return filed after the due date is deemed filed as of the postmark date. </div><div style="text-align: justify;"> c. Quarterly returns are deemed filed on April 15th of the following year.</div><div style="text-align: justify;"> 3. Returns Mailed to the Wrong IRS Service Center - A return must be filed at the service center where the taxpayer has been instructed to file the return, or otherwise probably will not be considered filed, thus causing the SOL to be indefinite. Section 6091.</div><div style="text-align: justify;"> 4. Unsigned Returns - Unsigned returns are considered not filed with an indefinite SOL, and the IRS has no duty to alert the taxpayer of an unfiled return. Section 6061.</div><div style="text-align: justify;"> 5. Fraudulent and Unfiled Returns - With intentionally false and fraudulent and unfiled tax returns, the SOL is indefinite. Section 6501.</div><div style="text-align: justify;"> 6. Partners - Late partnership returns do not affect the filing date of partners' individual tax returns. Section 6229.</div><div style="text-align: justify;"><strong>C. Suspension of SOL with 90-Day Letters and Tax Court Cases</strong></div><div style="text-align: justify;"> 1. 90-day Letters - The SOL is suspended from the date of issuance of a 90-day letter, and during that period the IRS cannot assess the deficiency. Section 6503(a)(1).</div><div style="text-align: justify;"> 2. Pending Tax Court Case - No assessment can be made during the time a Tax Court case is pending. The SOL is suspended during this period. Section 6213(a) and 6503(a)(1).</div><div style="text-align: justify;"> 3. Final Tax Court Decision </div><div style="text-align: justify;"> a. Tax Court decisions are not final until the appeal period has expired. The time to make an assessment is suspended during this period. Section 7481.</div><div style="text-align: justify;"> b. The appeal period runs 90 days after the Tax Court decision is entered. Section 7483.</div><div style="text-align: justify;"> c. The SOL is suspended an additional 60 days after the appeal period ends. Section 6503(a)(1).</div><div style="text-align: justify;"><strong>D. Collection SOL</strong> - The SOL on collection of an assessment runs 10 years from the assessment date. Section 6502(a).</div><div style="text-align: justify;"><strong>E. Criminal Cases</strong> - The SOL for prosecution of criminal cases is 6 years.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-70916478804524459802011-07-22T14:30:00.000-05:002011-07-22T14:30:36.704-05:00Make Sure Your Clients Have Substantiation to Prove Their Deductions<div style="margin: 0in 0in 0pt; text-align: justify;"><span style="color: #02160c; font-family: 'Arial','sans-serif';">In the recent case of <a href="http://r20.rs6.net/tn.jsp?llr=ssb5l8n6&et=1105453277298&s=8006&e=001_9Ahr-N1KdfXJP9QEzPJj0jPeg-Dso2HexYBSkWUZQqGSttX5RgzwqJQCo3WrN_8Eh-6cy9MgLF7ygheY3E9Kcc3_QiZJrj7Zt8PhyfduD42_xQfeGywS0je7YS4bxKvs5UqSaGRW9QxYItDc4R_WWicEO8chX-K" linktype="link" shape="rect" target="_blank" track="on">Stroff v. Commissioner</a>, T.C. Memo. 2011-80, the taxpayer was granted a partial deduction for expenses. Section 162(a) of the Internal Revenue Code allows a deduction for all the ordinary and necessary expenses paid or incurred by the taxpayer during the taxable year in carrying on any trade or business. The taxpayer has the burden to maintain records sufficient to substantiate the amounts and purposes of deductions claimed. </span></div><div style="margin: 0in 0in 0pt; text-align: justify;"><br />
</div><div style="margin: 0in 0in 0pt; text-align: justify;"><span style="color: #02160c; font-family: 'Arial','sans-serif';">The Court allowed the partial deduction based on the Cohan rule. The Court stated: "Under the Cohan rule, in the event that a taxpayer establishes that he or she has incurred a deductible expense but is unable to substantiate the precise amount, the Court may approximate the amount of the expense. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). The Court must have sufficient evidence upon which to make a reasonable estimate to apply the Cohan rule."</span></div><div style="margin: 0in 0in 0pt; text-align: justify;"><br />
</div><div style="margin: 0in 0in 0pt; text-align: justify;"><span style="color: #02160c; font-family: 'Arial','sans-serif';">We are seeing more and more cases where deductions are being disallowed because the taxpayer does not have the substantiation required by Section 274(d) of the Internal Revenue Code.</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-50999844781466934172011-06-09T13:54:00.000-05:002011-06-09T13:54:26.877-05:00AUDIT RECONSIDERATION<div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">Generally, once the IRS makes an assessment the taxpayer must pay the assessment and file suit in order to challenge the assessment. The taxpayer, however, does have other options rather than paying the tax. One option is to request audit reconsideration. Audit reconsideration is available when there has been a communication problem between the taxpayer and the IRS, or the taxpayer has chosen to ignore a statutory notice of deficiency. In some cases, the IRS has permitted audit reconsideration of returns after collection has begun. It is important to gather as much information as possible about the year in question to show a need for audit reconsideration. A taxpayer should always ask for audit reconsideration. The worst that can happen is the IRS denies audit reconsideration. If this happens, the taxpayer should ask for an appeals conference. </span></div><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;"></span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">The following three requirements must be met to receive audit reconsideration after collection has begun:</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">1. The taxpayer has changed addresses since the original tax return was filed; therefore, the deficiency notice was not sent to the taxpayer's new address.</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">2. The taxpayer has not received any notification from the IRS of the assessment or as to how the assessment was determined prior to receipt of the bill.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">3. The taxpayer has not had an opportunity to submit any required substantiation to tell his side of the story.</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">Reasons for Audit Reconsideration Request (IRM 4.13.1.3):</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">1. The taxpayer did not appear for the audit.</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">2. The taxpayer moved and did not receive the correspondence from the IRS.</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">3. The taxpayer has new documentation to present.</span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">4. The taxpayer disagrees with an assessment from an audit of the taxpayer's return and has additional information to be considered.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">5. The taxpayer disagrees with an assessment created under the authority of Section 6020(b). </span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">6. The taxpayer has been denied tax credits such as EITC claimed during prior examination.</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-18276304172201405572011-05-19T07:09:00.000-05:002011-05-19T07:09:55.937-05:00Old Letterhead and Excessive Postage<div class="separator" style="clear: both; text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">Below is the letterhead from a recent IRS letter. I did not know we still had District Directors. Also, is a postage mark on a large envelope from an agency, not the IRS this time, that contain</span><span style="font-family: Arial, Helvetica, sans-serif;">ed a two page letter. The postage was $1.28 for the two page letter. </span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDfl3FvxgSMn8EmTI4EfUxevrWSkzcOrQ9byCktqANPBRUEF1fzyxDR9ERv657tIqvg-Bn3CcVbh4MwsUpd3DUiIY4QZyavdnDZxEzKtIscJTlSQkLlF7SJ7UMsVRqDdGUu6ThUxIrH9PJ/s1600/Blog+Image.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640px" j8="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDfl3FvxgSMn8EmTI4EfUxevrWSkzcOrQ9byCktqANPBRUEF1fzyxDR9ERv657tIqvg-Bn3CcVbh4MwsUpd3DUiIY4QZyavdnDZxEzKtIscJTlSQkLlF7SJ7UMsVRqDdGUu6ThUxIrH9PJ/s640/Blog+Image.jpg" width="496px" /></a></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-7857841081219983282011-04-29T14:02:00.000-05:002011-04-29T14:02:27.308-05:00IRS Request Withdrawal of Collection Due Process Hearing - Before the Hearing<div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">Recently in letters from IRS Appeals advising the taxpayer that a hearing has been scheduled, the IRS is enclosing Form 12256, WIthdrawal of Request for Collection Due Process or Equivalent Hearing. We do not understand the purpose of enclosing this form. It is confusing to the taxpayer. The cover letter from Appeals states: </span></div><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<div style="text-align: center;"><span style="font-family: Arial, Helvetica, sans-serif;">"If you no longer want to pursue the CDP Hearing, I have enclosed Form 12256 for you to sign and withdraw your request. You can fax or mail this back to me prior to the deadline date". </span></div><span style="font-family: Arial, Helvetica, sans-serif;"><div style="text-align: justify;"><br />
</div></span><div style="text-align: justify;"><span style="font-family: Arial, Helvetica, sans-serif;">We see no reason for the IRS to include this form. Appeals can certainly discuss a withdrawal with the taxpayer during the hearing. It seems that Appeals should be trying to help the taxpayer, rather than seeking a withdrawal of the hearing request before the hearing takes place. While it is only page, we doubt that many taxpayers sign it. Therefore, it is just a waste of taxpayers’ money.</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-47331970699571459332011-04-29T06:24:00.000-05:002011-04-29T06:24:24.869-05:00Will the IRS Listen?<span style="font-family: Arial, Helvetica, sans-serif;">Here is an article titled </span><a href="http://money.msn.com/tax-tips/post.aspx?post=50b75732-81d1-4276-9594-2e18492c67f6"><span style="font-family: Arial, Helvetica, sans-serif;">"How to talk so the IRS will listen".</span></a><span style="font-family: Arial, Helvetica, sans-serif;"> This article give guidance on how to deal with the IRS.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-46928362180979220152011-04-13T06:25:00.000-05:002011-04-13T06:25:07.848-05:00How Long Should Records Be Kept?<span style="font-family: Arial, Helvetica, sans-serif;">In IRS Tax Tip 2011-71 the IRS has given advise on how long to keep records for tax purposes. The IRS says the following:</span><br />
<br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">1. Normally, tax records should be kept for three years.</span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">2. </span><span style="font-family: Arial, Helvetica, sans-serif;">Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.</span><br />
<span style="font-family: Arial;">3. </span><span style="font-family: Arial, Helvetica, sans-serif;">In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.</span><br />
<span style="font-family: Arial;">4. </span><span style="font-family: Arial, Helvetica, sans-serif;">Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.</span><br />
<span style="font-family: Arial;">5. <span style="font-family: Times New Roman;"><span style="font-family: Arial, Helvetica, sans-serif;">For more information on what kinds of records to keep, see IRS Publication 552, <i>Recordkeeping for Individuals</i>, which is available on the IRS website at <a href="http://www.irs.gov/">http://www.irs.gov/</a>. </span></span></span><br />
<br />
<span style="font-family: Arial;">It is getting more difficult to obtain deductions in an audit, at IRS Appeals, or in court, if records are not available to prove the deduction. Everyone should keep detailed records and this is especially true for automobile and travel expenses.<span class="skype_pnh_container" dir="ltr" tabindex="-1"><span class="skype_pnh_highlighting_inactive_common" dir="ltr" title="Call this phone number in United States of America with Skype: +18008293676"><span class="skype_pnh_left_span" skypeaction="skype_dropdown"> </span></span></span></span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-21281586908948463102011-04-08T21:00:00.002-05:002011-04-08T21:02:30.317-05:00How the IRS Will Operate If There Is A Shutdown<strong>Here is what the IRS Operations Will Be During A Government Shutdown</strong><br />
<br />
<br />
If the federal government shuts down, IRS operations will be severely limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.<br />
<br />
Individuals should keep filing their tax returns with the IRS and are required to do so by April 18 unless they obtain a six-month extension. The IRS will be accepting all tax returns. Once they’ve been accepted, the IRS will generally process and issue refunds for electronically filed individual returns. <br />
<br />
Individuals are urged to file electronically, because most of these returns are processed automatically and should not be delayed. Because of limited IRS staffing, paper returns will be accepted, but will not be processed in the event of a government shutdown and taxpayers who file paper returns will experience a delay in receiving their refunds. Limited telephone customer service functions will remain available, but IRS walk-in taxpayer assistance centers will be closed. <br />
<br />
While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date. <br />
<br />
<strong>Here are some basic steps for taxpayers to follow in case of a governnment shutdown:</strong><br />
<br />
How Does This Affect Me? What Do I Do?<br />
<br />
• You should continue to file and pay taxes as normal. <br />
• The April 18, 2011, tax deadline for filing the 1040 series of tax returns remains in effect. <br />
• Individuals filing the 1040 series of returns can still request a six-month filing extension to Oct. 17 by filing Form 4868. Taxpayers who request a filing extension must still make their tax payments by April 18, 2011.<br />
• The quarterly estimated tax payment due April 18 is unchanged. <br />
• All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.<br />
• You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.<br />
• Tax refunds for most electronically filed returns will continue to be issued. Because of limited IRS staffing, taxpayers who file paper returns will experience a delay in receiving their refunds.<br />
• Tax software companies, tax practitioners and Free File remain available to assist with taxes.<br />
• State tax deadlines are not impacted by the federal government shutdown.<br />
<br />
<strong>What Will Happen At The IRS If The Government Shuts Down?</strong><br />
<br />
Only the most basic functions will remain operating in light of the critical April 18 filing deadline.<br />
<br />
<strong>Operations Available</strong><br />
<strong><br />
</strong><br />
<strong>During the Government Shutdown</strong><br />
<br />
Tax processing operations are continuing at this time for electronically filed 1040 series tax returns.<br />
<br />
Tax refunds will be issued as returns are processed, so most tax refunds for electronically filed returns will be issued. Taxpayers should expect longer than normal delays for paper filed tax refunds. IRS e-file and Free File remain the best way of getting tax refunds quickly and are unaffected by the government shutdown.<br />
<br />
Tax deposits and payments are being processed, both for electronic and paper tax returns. Taxpayers should continue to make these payments as normal.<br />
<br />
The IRS will continue accepting all tax returns during this period. In addition to individual e-file, business e-file will remain open as well and refunds for business e-filers will continue.<br />
<br />
For individual taxpayers seeking assistance, the regular 800-829-1040 telephone line remains open. However, this line will not accept calls unrelated to individual tax issues, and taxpayers should anticipate much longer wait times. As an alternative, taxpayers are strongly encouraged to use www.IRS.gov.<br />
<br />
The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available. ”Where’s My Refund” will remain available on the IRS website for people to check on the status of their tax refunds.<br />
<br />
If people have already filed their return and the IRS has started processing their tax return, they generally will see no delays in their refunds being issued. The best source for information will be checking "Where's My Refund" at www.IRS.gov.<br />
<br />
The IRS Free File partners will continue to accept and file tax returns.<br />
<br />
Tax software companies will continue to accept and file tax returns.<br />
<br />
The IRS Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly (TCE) Programs will remain open in many locations to offer free tax help for taxpayers who qualify. Many Low-Income Taxpayer Clinics will remain open.<br />
<br />
Many automated IRS notices will continue to be mailed.<br />
<br />
<strong>Operations Closed</strong><br />
<br />
<strong>Or Unavailable During a Government Shutdown</strong><br />
<br />
(Partial Listing)<br />
<br />
Taxpayer Assistance Centers (TACs) where taxpayers walk-in for service will be closed. People with scheduled appointments during the government shutdown will have to reschedule.<br />
<br />
While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.<br />
<br />
No live telephone assistance will be available for non-1040 series business taxpayers on the 800-829-4933 number.<br />
<br />
No live telephone assistance will be available for exempt organizations, retirement plans administrators or governmental entities that use the 877-829-5500 number.<br />
<br />
The phone number for victims of identity theft (800-908-4490) will not be available.<br />
<br />
The IRS will not be working any paper correspondence during this period.<br />
<br />
Most IRS legal counsel services will stop.<br />
<br />
<strong>Information for Tax Practitioners</strong><br />
<br />
• The e-Help Desk will be available for e-file error reject code assistance only -- Monday through Friday from 6:30 a.m. to 5:00 p.m. Central Time.<br />
• The Practitioner Priority Service line will not be available.<br />
• Quick Alerts will be issued as necessary via the normal e-mail process.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-78022624013719240452011-04-08T07:10:00.000-05:002011-04-08T07:10:42.309-05:00Texas Clients of JK Harris & Co. to Get Refunds<span style="font-family: Arial, Helvetica, sans-serif;">The Texas Attorney General has settled a lawsuit with JK Harris & Co. See article <a href="http://www.chron.com/disp/story.mpl/business/7508623.html">here</a>. </span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-70905943189228309692011-04-08T07:06:00.000-05:002011-04-08T07:06:51.086-05:00The Dirty Dozen for 2011<span style="font-family: Arial, Helvetica, sans-serif;">The IRS has released the 2011 Dirty Dozen Tax Scams. See the release <a href="http://www.irs.gov/newsroom/article/0,,id=238262,00.html">here</a>.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4593230708105616048.post-46252778907952078092011-04-08T07:00:00.000-05:002011-04-08T07:00:37.348-05:00IRS Releases New Offer in Compromise Form<span style="font-family: Arial, Helvetica, sans-serif;">The IRS has released a new offer in compromise form for doubt as to collectibility. The new Form 656 can be found <a href="http://www.irs.gov/pub/irs-pdf/f656.pdf">here</a>. The offer in compromise <a href="http://www.irs.gov/pub/irs-pdf/f656b.pdf">booklet</a> has a new Form 433-A (OIC) to be used soley for an offer.</span>Unknownnoreply@blogger.com0