Fluent in English, Spanish & Italian | 888-882-9243

call us toll free: 888-8TAXAID

Monthly Archives: October 2019

IRS is Behind on Implementing Speedy Corporate Audits

October 25, 2019

The TIGTA issued it's report on September 27, 2019 stating that the Internal Revenue Service isn’t effectively auditing corporations, despite a change in policy on how the agency was to conducts tax examinations, that was supposed to make the process more efficient.
 
Historically, the LB&I Division has used a variety of methods to identify tax returns for audit consideration, and upon selection, the taxpayer’s tax return would be subject to audit. However, the new campaign approach involves selecting returns by issue and focusing on that issue in the examination process. TIGTA performed this review to assess the LB&I Division’s methodology for the identification and selection of campaigns. In January 2017, the LB&I Division announced the first 13 issue-based compliance campaigns.
As of April 2019, a total of 53 campaigns have been announced.

The Campaign Program Was A Change To The LB&I Division’s Overall Workload Selection Process And Is A New Strategy In How It Plans To Identify, Select, And Examine Strategic Compliance Issues.


The LB&I Division initially set expectations that campaigns would significantly overtake traditional inventory selection methods. As of September 2018, only 6 percent of inventory had been generated by campaigns, with this percentage climbing to 15 percent by February 2019.

Initial campaigns were not focused on the most significant compliance issues facing the IRS. Some issues were selected from employee suggestions. Other issues were chosen because there was a compliance plan developed, with training already in place, or existing base of himknowledge available.

TIGTA found that issues for campaigns were not selected or prioritized based on past compliance results or potential impact on compliance. While it is early to assess the overall results of campaigns, the limited results available suggest that the LB&I Division’s limited resources would be better utilized working issues selected based on compliance risk. 

 
TIGTA's September 27, 2019 Report Found That
The IRS Is Only Using The New Audit Selection System
For About 15 Percent of its Audits of LB&I Companies.
 

The remaining audits are coming from old processes that take more time and cost more for the IRS to conduct. The agency in 2016 announced a new system for selecting cases to audit. The IRS said it would focus on examining high-risk transactions, rather than auditing a company’s entire tax return as part of an effort to more efficiently enforce tax laws.

The IRS is also failing to use the results of past audits to select and prioritize future cases to examine, the report said. The agency said it is using data to manage its audit caseload and that initial results shouldn’t be used to scrap the program. “We agree that these results, also described by IRS management as lackluster, should not be used to assess the success or failure of the program as a whole,” the IRS Office of Audit said in response to the Inspector General analysis.

The Report Illustrates How The IRS Has Struggled to Ensure Tax Compliance in Recent Years.

 
 The Number Of Revenue Agents Fell
to 2,923 in 2018, From 5,224 in 2010,
As Budget Cuts and Hiring Freezes Have Impeded The Agency’s Audit Capability.

 

“Given the diminished examination resources, the IRS should be even more focused on emphasizing areas that have the highest compliance risk,” the report said.

The IRS also said that staff and resources were allocated to work on implementing the 2017 tax law in 2018 and 2019, directing funds away from the audit program.

This isn’t the first time the IRS has received a negative report about how it is auditing corporations. In September, the Inspector General released a report saying IRS employees had collectively spent nearly 28,000 work days over a four-year period auditing mergers and acquisitions that ultimately yielded no additional tax revenue.

Have an IRS Tax Problem?

 

  
Contact the Tax Lawyers at 
Marini& Associates, P.A. 

 

for a FREE Tax HELP Contact Us at:
www.TaxAid.com or www.OVDPLaw.com 
orToll Free at 888-8TaxAid

Read more at: Tax Times blog

TC Sustains IRS Denial of Face-to-Face CDP Hearing

October 22, 2019

The Tax Court has sustained in Roberts, TC Memo 2019-117 the IRS's denial of a request by married taxpayers for a face-to-face Collection Due Process (CDP) hearing. Because the taxpayers failed to participate in the originally scheduled telephone CDP hearing, the Court also sustained IRS's Notice of Intent to Levy.

An IRS determination regarding a proposed collection action will be sustained by the Tax Court unless the taxpayer proves there was an abuse of discretion by showing that the IRS determination was arbitrary, capricious, or without sound legal or factual basis. (Sego 114 TC 604 (2000)).
A taxpayer may request a face-to-face CDP hearing at the Appeals Office closest to the taxpayer's residence. A face-to-face hearing is allowed by regulations, but not required. (Katz 115 TC 329 (2000) ;  Reg. §301.6320-1(d) Q&A D-6) If the taxpayer wishes to offer a collection alternative, a face-to-face hearing will not be granted if the taxpayer is not in compliance with all filing obligations. (Reg. §301.6330-1(d)(2))

If A Taxpayer Has Been Given A Reasonable Opportunity For A Hearing, But Does Not Take Advantage Of That Opportunity, The Tax Court May Sustain IRS's Determination To Proceed With Collection On The Basis Of The Appeals Officer's Review Of The Case File. (Rivas, TC Memo 2012-20)

The IRS assessed a liability for tax, based on the married taxpayers' 2015 return an added applicable penalties, and interest. The IRS then issued to each taxpayer a Notice of Intent to Levy. The taxpayers' representative, a certified public accountant (CPA), timely requested a CDP hearing.

The taxpayers requested an offer in compromise or an installment agreement. IRS acknowledged this request, provided the taxpayers with contact information for someone who could answer any questions they had and assigned a settlement officer (SO) to the case.
The SO determined that the assessment for 2015 was properly made, that notice and demand were properly mailed to the taxpayers' last known address, that the taxpayers did not have any liability for other periods, and that they were in compliance with filing requirements.

On May 23, 2017, the SO mailed a letter to the taxpayers accepting their request for a CDP hearing. The letter stated the date for a telephone hearing and a date for submission of required documentation (including Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals), without which she could not consider collection alternatives, such as an offer in compromise, an installment agreement, or currently-not-collectible status.

The Couple's Representative, A CPA, Was Unavailable When the SO Called on the Hearing Date.

(Not Professional & Not Good for the Taxpayer)
  • The CPA later called and requested that the hearing be rescheduled and moved to Houston, Texas. No documentation had been submitted at that time. (Yea right)
  • The SO informed the CPA that she could not reschedule or transfer the hearing because the CPA did not contact her before the hearing with a request to reschedule. (the correct and professional thing to do) 
The CPA claimed to have requested a face-to-face hearing prior to the scheduled telephone conference, but had called the information contact originally given to the taxpayers, instead of the SO's telephone number which was on the initial CDP contact letter. (Send an e-fax the next time to document that you contacted the SO).

The CPA requested a face-to-face hearing in Houston on numerous occasions, and the SO informed the CPA on each occasion that the taxpayers did not qualify for a face-to-face hearing. (Do you think SO has had enough of the CPA impossibly thanks that these are stalling techniques?)

The SO informed the CPA that she would permit him to schedule a telephone hearing on July 12, 2017. Prior to that date, the CPA submitted to IRS by fax some financial information, including an unsigned Form 433-A. On the fax, the CPA again requested a face-to-face hearing, which the SO denied on July 14, 2017. On July 28, 2017, the SO issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 sustaining the proposed levy.

The taxpayers petitioned the Tax Court on August 28, 2017, arguing that a face-to-face hearing will ordinarily be offered to a taxpayer. On June 26, 2018, IRS moved for summary judgment with regard to the 2015 liability. Also on that date, the Tax Court directed the taxpayers to file a response to the motion. No response was filed.
The Court stated that it could grant IRS summary judgment solely based on the taxpayers' failure to respond to the motion, but that summary judgment was also appropriate on the merits.

The Taxpayers Failed To Request A Face-To-Face Hearing Prior To The Date Of The Initially Scheduled Telephone Conference, Did Not Reschedule The Telephone Conference, Did Not Timely Submit Complete Financial Documentation, And Continued To Request A Face-To-Face Hearing.


Therefore, the SO did not abuse her discretion in denying a face-to-face hearing; could not consider collection alternatives; and properly sustained the proposed levy.

This is a Great Example of How Not To Handle A CDP Hearing!
 


Want Your CDP Hearing Professionally Handled?

 


Contact the Tax Lawyers at Marini & Associates, P.A. 

 
 
for a FREE Tax HELP Contact Us at:
www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243
 

 

Read more at: Tax Times blog

Accidental Americans Ask France to Block FATCA Reporting

October 22, 2019

A group representing French-American taxpayers said on October 3, 2019 that it had filed a suit against France with the European Commission, hoping to avoid strict US compliance rules that could see them blacklisted by French banks starting in January.　

The "Accidental Americans" association has been battling for years to be exempt from a US demand that all its citizens overseas file bank details along with yearly tax returns.　

The group says thousands of French and other foreigners are deemed Americans because they were born in the US, even though they may have lived there only a few months or years when they were young.　

There are more than 780 ‘accidental Americans’ spread around France, all they have in common is the fact that they are entitled to American citizenship. Some of them had left America in the days after being born in an American hospital. Some of them didn’t even know they were technically American. Some of them don’t even speak English.　

There are estimates that there may actually be as many as 10,000 ‘accidental Americans’ in France, thousands of whom still do not know that they technically have American citizenship, and up to 300,000 across Europe. While formally giving up US citizenship is an option, it can be long and costly.

They want to be freed from the annual filing requirements with the Internal Revenue Service, and from seeing their banks forced to hand over their banking details to the US taxman.　

In 2017, Washington accepted a partial moratorium on the rule, known as the Foreign Account Tax Compliance Act (FATCA), set up to battle offshore tax evasion.

The FIRPTA exemption expire at the end of this year, and the French banking federation FBF has warned that 40,000 accounts could be closed come January if no accord is reached on the filing requirements. In refusing to hand over information required by the United States, French banks would expose themselves to penalties.　

Accidental Americans considers that a Franco-American agreement from 2013 which allows for FATCA's application in France, "violates EU laws on data protection" by authorising "the transmission and storage of huge amounts of personal data in the United States," it said in a statement. As a result, the advocacy group says French nationals with dual American citizenship face de facto discrimination, even though "most of these people have no links with the United States."　

 Have a FATCA Tax Problem?
 


 Contact the Tax Lawyers at 
Marini & Associates, P.A. 

 
 
for a FREE Tax HELP Contact Us at:
www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243
 

 
 

Read more at: Tax Times blog

TC Helds That IRS Settlement Officer Abused Discretion in Sustaining the Levy to Collect Penalties

October 22, 2019

The Tax Court has found that an IRS settlement officer (SO) abused his discretion in sustaining a proposed levy to collect unpaid trust fund recovery penalties (TFRPs) after the taxpayer's offer in compromise (OIC) had been terminated due to default. The court remanded the case for determination of whether the OIC had been properly terminated.
Judicial review of a Collection Due Process (CDP) hearing is limited to the administrative record. (Kreit Mech. Assocs., Inc., (137 TC 123 (2011)) The reviewing court determines whether the SO exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. (140 TC 173 (2013)). An SO abuses his discretion if, among other things, he does not properly verify that the requirements of any applicable law or administrative procedure have been met. (Reg. §301.6330-1(e))
When IRS determines that an OIC is in default, it is required to send the taxpayer a default letter to cure the noncompliance items. If the taxpayer does not cure the default, the OIC is terminated. (IRM 8.22.7.10.8(1) (August 9, 2017)).
The taxpayer was president of a corporation that failed to pay employment taxes for two tax periods in 2003 and two periods in 2004. An IRS settlement officer (SO) determined that the taxpayer had signatory authority over the corporation's bank accounts and was a responsible officer for the nonpayment of its employment tax liabilities.
The SO made two assessments covering the periods at issue for trust fund recovery penalties (TFRP). The taxpayer submitted a Form 656, Offer in Compromise (OIC), and offered to compromise the liability of the corporation. An IRS Appeals office in Sacramento, California, accepted the OIC on April 27, 2010, and noted in the acceptance letter the conditions on which the OIC would be accepted, including payment of all required taxes for five years or until the offered amount was paid in full, whichever was longer. IRS later notified the taxpayer that he had met the payment provisions of his OIC and began processing the relevant lien releases.
The taxpayer paid his income taxes, along with late penalties and interest, for tax years 2010 through 2012.
In December 2012, IRS issued a notice of proposed changes, to which the taxpayer did not respond, followed by a notice of deficiency in May 2013 based on the taxpayer's omission of certain unemployment compensation from income for 2010.
The taxpayer did not respond to the notice of deficiency, and IRS in September 2013 made a default assessment of tax, penalties, and interest. The taxpayer did not receive these notices because he had changed his residence but had not notified IRS of change of address.
The taxpayer could avoid default by payment of his liabilities by January 2, 2014. In 2014, the Brookhaven Appeals office terminated the taxpayer's OIC and reinstated the TFRP penalties, minus payment already made by the taxpayer, due to failure to pay the amounts due by the January 2, 2014 deadline.
 

However, the record did not reflect a written communication to the taxpayer informing him of a default on the OIC, requesting that he contact IRS, or setting a January 2, 2014 deadline to respond or pay the amount due (default letter).

The SO held a telephone CDP hearing with the taxpayer's representative on February 11, 2016. The SO refused to reinstate the OIC and issued a notice of determination sustaining the proposed levy.
In August 2017, IRS moved to remand the case to the Appeals Office for a supplemental CDP hearing to consider a new OIC as a collection alternative, based on the fact that the SO had not provided the taxpayer with a Form 656, or set a deadline for submission of a new OIC.
The court granted the motion to remand. At the supplemental telephone CDP hearing in November 2017, the taxpayer's representative indicated that the taxpayer was not prepared to submit a new OIC at that time. The SO found that the Brookhaven IRS office had followed all procedures in notifying the taxpayer before termination of the OIC. Because the termination was upheld by Appeals in January 2014, the SO determined that the taxpayer could not challenge the termination of the OIC.
The taxpayer petitioned the Tax Court. At trial, the taxpayer did not present any evidence or argument as to any collection alternatives other than reinstatement of the original OIC.
The Tax Court determined that the taxpayer had not filed a change of address form and so was responsible for his failure to receive the notices of change, deficiency, and levy.
However, IRS was required to send the taxpayer a default letter and give him an opportunity to cure the default. The SO was required to verify that the Brookhaven office had sent the taxpayer a default letter. The administrative record did not support IRS's contention that a default letter had been sent.
Neither the notice of change letter nor the notice of deficiency that were sent to the taxpayer warned him of potential termination of the OIC, set a deadline for default, or informed him of an opportunity to cure the default.
Therefore, the determination to sustain the proposed levy was an abuse of discretion, and the case was remanded for the SO to consider whether the OIC was properly terminated, and, if not, whether the terminated OIC should be reinstated as a collection alternative.
The court also suggested that a new SO be appointed.
 
Have A Tax Problem?
 Contact the Tax Lawyers at 
Marini& Associates, P.A. 

 
 
for a FREE Tax HELP Contact Us at:
www.TaxAid.com or www.OVDPLaw.com 
orToll Free at 888-8TaxAid (888) 882-9243
 


 
 

Read more at: Tax Times blog

Live Help