I was unable to completely review the files.
While I was not able to review everything, I did see:
This was originally a nonfiler case. IRS is understandably tougher on nonfilers.
They are taking a tough negotiating position with you because they believe they can.
You sent copies of summons for both taxpayer and spouse, but there were no specifics listed in the matters to be discussed. At a minimum, you should limit the scope of the investigation, so IRS can not explore any tax matters and years they like. Because of the nature of these proceedings, I strongly suggest you withdraw and allow them to engage a tax attorney.
I would also make a FOIA request for the entire case file.
I would then notify IRS that taxpayers will be engaging new representation, and ask for time to receive the file, review your file and the FOIA documents with the new tax pro, and allow him/her to represent the taxpayers. Telling IRS you are withdrawing may be needed to buy you the time you want to hire substitute representation.
Thanks from Just Answer/Pearl.