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Audit Support/Representation/Litigation

If you are faced with an audit, our group will manage the process throughout and fight to obtain the best possible results for you and your business.  We are proactive in our approach and will be your strongest advocate so that a swift resolution will be reached. We work directly with the taxing authorities to eliminate your interaction with the taxing authorities but rely upon your cooperation to achieve a timely, favorable result. Further, our attorneys are members of the Tax Court and federal courts.

Our attorneys will assist with reaching a favorable resolution if the taxing authorities take issue with a position taken on a return. We can assist you in:

  1. Fast Track Settlements – represent you at a Fast Track Settlement conference.
  2. Appeals – We can represent you through the formal appeals process including representation in court.
  3. Penalty Abatement – assist with penalty abatement requests as well as penalties resulting from late filed returns or late payments.
  4. Offer in Compromise (OIC) – We can assist you with filing an OIC, which allows qualified taxpayers to settle tax debts for less than the full amount owed.
  5. Post-Audit/Dispute Resolution Options

The statute of limitations for the IRS to assess taxes on a taxpayer expires 3-years (three) from the due date of the return or the date on which it was filed, whichever is later. A tax return is considered to be filed on the due date of the return if it was filed on or before its due date. There is a 6-year statute of limitations for a substantial understatement of income (i.e., generally a 25% understatement of gross income). There is no statute of limitations for a fraudulent return (burden on the IRS to prove) or a missing/non-filed return. Further, the IRS generally has 10-years to collect the tax after which it is barred from doing so. Accordingly, it is prudent to file tax returns timely.

In order to claim a refund, there are certain statutory timelines that must be met. 26 U.S.C. § 6511(a) and Treas. Regs. § 301.6511(a)-1(a) provide three years from the date of filing the tax return to claim a credit or refund, or two years from the date the tax was paid, whichever is later. A return is considered filed or tax paid before the last day prescribed for its filing or payment without regard to extensions. 26 U.S.C. § 6513(a).

Administrative Appeals/Tax Litigation

There are certain statutory timelines that you need to be aware of if the controversy is not resolved at the conclusion of the audit:

  1. 30-day letter. Upon receipt of the 30-day letter, you have three options:
    1. Pay the deficiency;
    2. Appeal the deficiency within the 30-days; or
    3. Wait to receive a 90-day letter.
  2. 90-day letter (Notice of Deficiency, Form CP3219N). Upon receipt of the 90-day letter, you have 90-days to file a petition with the Tax Court and do not have to pay the tax. If you fail to adhere to the 90-day period without petitioning the Tax Court, that right has lapsed. The Tax Court’s jurisdiction to redetermine a deficiency depends on the issuance of a valid notice of deficiency and the timely filing of a petition. See Monge v. Comm’r, 93 T.C. 22 (1989); also, Normac, Inc. v. Comm’r, 90 T.C. 142 (1988). At that point, the U.S. district courts and the Court of Federal Claims hear tax cases only after the taxpayer has paid the tax and filed a claim for a credit or refund. 26 U.S.C. § 6532.

Under 26 U.S.C. § 7491(a)(1), the taxpayer has the initial burden of proof and introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer for any tax imposed, then the IRS has the burden of proof with respect to that issue.

Trust Fund Recovery Penalty

Under 26 U.S.C. § 6672(a), an individual can be held personally liable for a penalty for the willful failure to collect, account for, and pay to the IRS the employment taxes of a business. This is referred to as the “trust fund recovery penalty” (TFRP). The statute states in pertinent part,

Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. Emphasis added.

As such, the statute creates a personal liability, which can attach to anyone from the payroll clerk to the CEO. It is purposely broadly written. For example, an employer withholds $1,000 from an employee’s paycheck but does not remit those funds to the IRS. When the employee files their personal income tax return, they are entitled to claim the $1,000.00 as an amount properly withheld irrespective of the fact that the employer did not remit the funds to the IRS. For that reason, the statute gives the IRS broad power to collect the tax.


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