Peter’s Top 10 IRS Procedural Issues

Peter’s Top 10 IRS Procedural Issues

Earlier this month we had our annual Withum Partners-Network Pre Tax Season Continuing Education Program for accountants in NY and NJ. It was a free program for over 150 colleagues who are members of the Partners-Network. We had six speakers and Peter Weitsen gave us an up to the minute look at what is going on at the IRS. This is our most popular program and the three times a year Peter presents it are usually always different. Here are some of Peter’s insights I think you would enjoy knowing about.

1. Anyone owing the IRS over $51,000 that does not have a payment agreement in effect can have their passport revoked.
2. While IRS audits are at an all-time low, they are using analytics and algorithms to identify taxpayers to send notices to questioning specific items that were either on the return or omitted from the return. These are labeled CP2000 letters and 25 million discrepancies were identified in 5 million notices last year generating substantial revenues for the government. The 5 million notices was about 3.3 percent of the 152 million returns that were filed.
3. A CP2000 notice is not a bill. However, if there is no response, at some point the IRS will determine the amount of a deficiency and send a bill. They also send CP2501 notices which are for a preliminary contact regarding a tax return when the discrepancy appears unusual.
4. When there is no response to a bill, or an unagreed audit, the IRS will eventually send a Statutory Notice of Deficiency giving the taxpayer 90 days to agree to the assessment or file a petition in U.S. Tax Court. When that notice is received and you wish to contest it, an immediate call to the IRS to the number on the letter will provide an expedited meeting (either in person or by telephone) with an IRS agent to discuss the case. If nothing is done, the assessment becomes final after 90 days.
5. All notices from the IRS should be responded to as quickly as possible and certainly prior to the due date they put on the letter. This will eliminate unnecessary correspondence and will quicken the resolution.
6. Calls made to IRS offices can leave you on hold up to two hours at which time, if unanswered, the caller will be disconnected. If you speak to a representative and get an indication that there will be unsatisfactory result you can hang up and immediately call back. You will be connected to a different agent and sometimes someone in a different office.
7. If a return was not filed for the previous year, the current year’s return will not be accepted for e-filing. If the return is rejected and you are unaware of the reason, consider that the IRS might not have received your prior year’s return and follow up on this. If the return is not accepted for e-filing, you should mail a paper return within the due date.
8. The IRS has a return integrity and compliance service group that sends out a 5747C notice that requires a taxpayer to verify who they are by making an appointment with and going to an IRS assistance center within 30 days. In 2017, the first year of the program, $32 billion was protected from potential theft. Note: If the taxpayer reports the breach, no visit to IRS office is required.
9. The IRS launched online accounts in 2016 with details of balances owed and payments made by tax year, access to tax record information and a link to installment agreements. This is working quite well.
10. The IRS made public 24 large case and international “campaigns” they are conducting in lieu of audits. This involves the IRS sending soft letters questioning specific transactions. These are being used instead of audits and are generating satisfactory results.

The above was shared with our colleagues, but all of it affects clients, so hopefully you will now be a little more aware of updated IRS initiatives.