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Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1672
Experience:  Enrolled to Represent Taxpayers Before The IRS
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The IRS is disputing a deduction reported on your 2005 tax ...

Customer Question

The IRS is disputing a deduction reported on your 2005 tax return, which you filed on April 17, 2006. On April 2, 2009, the IRS audit agent asks you to waive the statue of limitations for the entire return so as to give her additional time to obtain a Technical Advice Memorandum. The agent proposes in return for the waiver a "carrot"-the prospect of an offer in compromise-and a "stick"-the possibiltiy of a higher penalty. Although you have substantial authority for the deduction, you consider the following alternatives: (1) waive the staue of limitations for the entire return, (2) waive the statue of limitations for the deductions only, or (3) do not waive the statue of limitations in way, shape, or form. Which alternative should you choose, and why?
Submitted: 9 years ago.
Category: Tax
Expert:  Marvin,EA replied 9 years ago.

Hello and thank you for using Just Answer. I would not waive the statue of limitations in any way, shape or form if I have substantial authority for the deduction. Less than 5% of taxpayers who file for a office in compromise get approval and the penalies are not set by the agent. The third alternative is the one you should choose.

If it is to your benefit to give more time, they you will want to give IRS a reasonable extension. If the case is going to appeals you will need to be sure that appeals has appropriate time to work the case.