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We are being audited for 2014, 2015, 2016. They are auditing…

We are being audited...

We are being audited for 2014, 2015, 2016. They are auditing a single member LLC but because our personal return is encompassed together they are auditing that also. The auditors first determination (before she had all the paperwork) is that we have $200,000.00 of unreported income. All income can be accounted for that has been reported and this information has been sent to her. They want to extend because it is within 6 months of the statute. We would like her to make a determination and then appeal the decision if needed. Supervisor stated they would require the auditor to wrap up by next Friday if we didn't sign the extension. Not real comfortable giving them that much more time. What is an experts opinion about signing the extension?

Accountant's Assistant: The Expert will know how to help. Is there anything else the Expert should be aware of?

We have another business that they haven't gotten in to and I don't really want them to go into that as this has been stressful enough. I know we can prove all of the income as non reported or the things that are reportable have been reported. I have read both sides, give them the extension or do not give them more time, just appeal.

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Answered in 8 minutes by:
10/14/2017
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,186
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is Angela. I will be assisting you.

In brief, allowing them more time, can expose you to more assessment. The more time they have, they more time they have to dig. SEE BELOW:

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Taxpayer Options

Besides signing the form, what options are available to a taxpayer when presented with an extension request for an income tax case? The taxpayer can ask for a fixed statute date as opposed to an openended one. An open-ended statute of limitation tends to result in an examination being in process for a long time because there may be no urgency for the examiner to complete the audit. It also can expose a taxpayer to an unexpected assessment if the Form 872-T is not submitted. A taxpayer can extend a fixed extension date, if necessary, by signing a second consent. The taxpayer could ask for a shorter extension period than requested by the IRS so that the examination could be concluded quickly.

The taxpayer can also request a consent that is restricted to specific issues. The procedures for restricted consents are found in Rev. Proc. 68-31, as modified by Rev. Proc. 77-6. Examiners tend to not like restricted consents because the restrictive language must be approved by certain Service officials, necessitating procedures that result in delays. Such consents may not be obtained until examinations have been completed and the examination reports have been prepared. Restricted consents are normally limited to two issues.

Declining to sign the consent can result in a deficiency notice being issued, as mentioned above, but that may not be to the taxpayer’s disadvantage. Before issuance, a notice is reviewed for accuracy by the appropriate IRS officials; once it is issued, it gives the taxpayer a clear picture of proposed adjustments. The taxpayer may file a petition with the U.S. Tax Court but may also request Appeals consideration, which Appeals may grant at its discretion. Thus, an Appeals hearing may still be available without the taxpayer having to go to Tax Court. Appeals is generally precluded from raising new issues or adjustments that the examiner did not propose.

REFERENCE SOURCE:

https://www.thetaxadviser.com/issues/2009/jul/consenttoextendthestatuteoflimitation.html

If you do not require further assistance with this matter, I ask that you please take the time to scroll to the top of the page and select 3 or more stars to positively rate my response so that I can receive credit for assisting you. A 5 star rating is greatly appreciated. Thank you in advance.

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Customer reply replied 4 months ago
thats what I think. Is there sufficient time (6 months) to do an appeal and is an appeal just the information that has already been looked at? We take our documents in and then they look them over and make a determination?

Hello again.

General Time frame

First Notice from Appeals

Normally, you can expect to hear from an Appeals employee within 60 days after the Office of Appeals receives your file. Response times from Appeals can vary, however, depending on the type of case and the time needed to review the file.

If it has been more than 120 days since you filed your protest requesting an appeal and you have not heard from the Office of Appeals, then you should contact the IRS office to which you sent your appeal request. If the IRS office to which you sent your request cannot provide a reason for the delayed Appeals response you have two options: (1) ask the IRS office to contact Appeals for an approximate date when Appeals might contact you, (2) call the Appeals Account Resolution Specialist (AARS) function at(###) ###-#### The AARS can tell you if your case has been assigned to an Appeals employee and how to contact that employee directly.

----------------------------------------------

If your case qualifies for an appeal, an Appeals employee will review the issues of your case with a fresh, objective perspective and schedule a conference with you. Appeals conferences are informal and conducted by correspondence or telephone. Most differences are settled in these appeals without expensive and time-consuming court trials. Appeals will consider any reason you have for disagreement, except for moral, religious, political or constitutional arguments, conscientious objections, or similar grounds.

It is important that you provide all requested and/or relevant information to the auditor or revenue officer who works your case. Waiting to provide such information to Appeals will generally result in your case being returned to the auditor or referred to the revenue officer for consideration of the new information. Either action could cause delays in resolving your tax matters.

------------------------------------

Timeframe for Resolving Your Case

The time it takes to resolve your case depends on the facts and circumstances. It could take anywhere from 90 days to a year. Please contact your Appeals Officer or Settlement Officer for a more specific timeframe.

REFERENCE SOURCE:

https://www.irs.gov/compliance/appeals/what-can-you-expect-from-appeals

A positively rating is greatly appreciated. Thank you in advance.

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Customer reply replied 4 months ago
Ok, well I have already read all that. I am looking for a real tax attorneys opinion on how to proceed. Thank you.

Would you like for me to opt out and release the question back into the queue to see if you can get a response from a Tax Attorney?

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Customer reply replied 4 months ago
Sure, but only if someone can help me

I can't guarantee you that, but we do have some Tax Attorneys on the site. The question will go back into the queue and will remain there until someone else clicks on it to answer. You may or may not get another response right away, and if others feel that they cannot offer any different information, you may not get a response.

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Customer reply replied 4 months ago
Ok

We do not receive credit for assisting unless we are positively rated. However, as you require additional confirmation, I will opt out and count this as my charity for the day.

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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,473
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

HI, MY NAME’S LANE - I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice 1986

...

I agree with the your assessment/intuition that you should not grant the extension.

...

As has been pointed out, if you know that the income has been reported accurately, then you have no REASON to grant them the extension.

...

Further, the length of time necessary to get a response from appeals is irrelevant here. Once you send in the Form 12153 all time lines stop ... giving appeals division the time it needs to make an assessment of your case.

...

Further, Appeals is separate from and independent of the IRS Collection office that initiated the collection action. Appeals ensures and protects its independence by adhering to a strict policy of prohibiting certain ex parte communications with the IRS Collection office or other IRS offices, such as discussions regarding the strengths or weaknesses of your case (See Rev Proc 2012-18 )

...

I would NOT grant the extension, and then have the appeals form ready if they do send an assessment notice.

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The two main procedures are Collection Due Process and Collection Appeals Program.

Collection Due Process (CDP) is available if you receive one of the following notices:

...

• Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320

• Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing

• Notice of Jeopardy Levy and Right of Appeal

• Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing

• Post Levy Collection Due Process (CDP) Notice

...

Collection Appeals Program (CAP) is available for the following actions:

• Before or after the IRS files a Notice of Federal Tax Lien

• Before or after the IRS levies or seizes your property

• Termination, or proposed termination, of an installment agreement

• Rejection of an installment agreement

• Modification, or proposed modification, of an installment agreement

...

Again, appeals will "stop the locomotive," IF they actually assess.

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Customer reply replied 4 months ago
once the appeals request starts, the statute of limitations doesn't apply? They said we need to extend the time frame to allow us sufficient time for appeals before the statute runs out for the 2014 audit.

That's right as well. DO NOT need to grant an extension in order to file an appeal. BUT once the appeal starts, the statutory clock is tolled

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(Right. meaning that the clock stops ticking while in appeals - it's doesn't re-set it either)

...

It's NOT right that you have to grant the extension to do the appeal. Just send in the appeal before the time period is up.

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Customer reply replied 4 months ago
Would you have information on a tax attorney in my area. Shoukd I hire one to do this process vs my accountant

I would ... they will have access to the IRS E-Services which will allow them to fax in the appeals form. What's your area?

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Customer reply replied 4 months ago
Sacramento, ca
Customer reply replied 4 months ago
Do they have to grant an appeal?

No, but they have to grant the hearing. Gives you a second set of (typically more reasonable) ears. If a tax attorney requests, you'll get the opportunity to have them look at your case.

...

https://www.linkedin.com/in/dennisbrager/ (LA Area but excellent)

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Customer reply replied 4 months ago
That's a little confusing to me. They have to grant a hearing but not an appeal. What's the difference?

Granting an appeal means that you're appeal is affirmed. That whatever you're appealing is found to be valid and you have a successful outcome.

...

I GAVE you the criteria for requesting an appeal. ANYONE meeting that criteria can request an appeal (Either CAP or CDP depending on your situation)

...

http://www.mwattorneys.com/ <- I have no association, but they have an excellent track record

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,473
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 months ago
Ok. Thank you.
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,473
13,473 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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