You make the callBy: NATP Research
November 7, 2019

Question: Jack’s 2017 return was examined, and the auditor determined that there were several questionable business deductions. After further review of the return, both you and Jack agree that there were questionable items deducted. Even though a few items claimed as business expenses cannot be supported, most of the expenses deducted can be substantiated by Jack. What options are available if the auditor rejects all expenses deducted on the business return?

Answer: Jack has a few options available. Asking to speak with a supervisor is at the top of the list if the auditor seems unreasonable or biased within the situation. Another option is to request an Audit Reconsideration with the appropriate service center through written correspondence. Also, the request can be obtained by calling the IRS 800 number. The IRS will respond with a list which contains the requested information to reconsider the disputed deductions. This process should delay collections if the supporting information is provided to the IRS within 30 days from the date of contact.

While the audit is in process, Jack can request the auditor file a Technical Advice Memorandum (TAM) if the circumstances involved have not been addressed or if lack of uniformity exists for similar facts and circumstances. Only the agent or director can file a TAM. Jack will be provided a copy that he can modify by submitting a supplementary statement to the national office. If the audit is closed and the reconsideration does not produce the desired results, Jack can file an appeal as a final option.

Federal Tax Research
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IRS creates new office to implement Taxpayer First ActBy: National Association of Tax Professionals
November 5, 2019

Any time a new tax law is enacted, the IRS is responsible for ensuring the provisions of the new law are met. Such as the case with the Taxpayer First Act (TFA). A recent memo to IRS employees from Commissioner Charles Rettig outlined his plans to ensure the provisions of the TFA are fulfilled while providing “best in class” services to everyone who reaches out to the IRS for assistance.

To meet this challenge, Commissioner Rettig appointed his Chief of Staff Lia Colbert to launch and lead the TFA Office. In addition, Lisa Beard, former acting deputy commissioner of SB/SE, Rob Ragano, associate CIO for Applications Development in IT, and Jim Clifford, director of Customer Account Services in W&I, will be joining Lia to oversee the implementation of the TFA’s provisions.

The TFA was signed into law on July 1, 2019, and aims to protect taxpayers from tax-related identity theft by allowing all taxpayers to obtain an Identity Protection Personal Identification Number (IP PIN). The act also establishes an independent office of appeals, includes provisions to exempt low-income taxpayers from the IRS’s private debt collection program and other measures aimed to improve overall IRS customer service.

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You make the callBy: NATP Research
October 31, 2019

Question: Rodney filed his Schedule C for 2016 and 2017 using the cash method of accounting. When filing his 2018 Schedule C, can he change his method of accounting to accrual by amending his 2016 and 2017 returns or does he need to file Form 3115 to change his method of accounting for 2018?

Answer: Rodney needs to file Form 3115 to change his method of accounting for 2018. Two returns filed in consecutive years using an improper method establishes a method of accounting for which consent to change is required. A taxpayer may not file amended returns to change such method (Rev. Rul. 90-38).

Federal Tax Research
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