Posted by: Taxlitigator | July 15, 2015

PRACTICAL ADVICE FOR AN IRS EXAMINATION

    • Maintain timely, clear communications with the examining agent and the client – confirm statements in writing.
    • Know your case and your client – verify information provided by your client. Establish relevant facts, evaluate reasonableness of assumptions or representations, apply relevant legal authorities in arriving at a conclusion supported by the law and the facts.
    • Advise the taxpayer re potential penalties.
    • As a general rule, taxpayers should not meet directly with agents.
    • Maintain copies of all documents provided.
    • Do your due diligence – reasonably verify factual statements by the taxpayer, especially those claims that upon reflection seem too good to be true.
    • Be aware of the benefits afforded by filing a Qualified Amended Return – see Treas. Reg. § 6664-2(c)(3). Timely filed amended return may reduce or eliminate accuracy-related penalties – but no automatic impact on civil fraud penalty.
    • Remain professional with the appearance of cooperation at all times. An audit need not be an adversarial process.
    • Be aware of relevant privileges, especially the accountant-client privilege (IRC Section 7525). Avoid inadvertent waivers of any privilege.
    • Be cautious but reasonable in extending the statute of limitations.
    • Never file original returns with the examining agent.
    • Taxpayer & return preparer interviews – Can you obtain written questions in advance? Timing – if the interview must occur, attempt to coordinate it near end of the audit. Place – request a location where the taxpayer is most comfortable.
    • Maintain notes of all calls and contacts with the examining agent. When possible, confirm statements in writing. Definitely confirm commitments to provide information by a certain date in writing and meet the commitment.
    • Control client expectations – Maintain an objective view of the relevant facts.
    • Conclude the examination ASAP.
    • Prepare, prepare, and then prepare some more . . .


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