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You Can Beat the IRS

Beware of someone whose fee is based on a percentage of how much you save in taxes. Or who promises to get you a significantly higher refund than anyone else can. People like these are likely to prepare outrageous returns that will land you deep in trouble with the IRS.

Just because the IRS says you owe money doesn’t mean that’s correct. The agency makes mistakes - plenty of them, even computing penalties and interest.

Having a smart, well-prepared tax expert on your side can be a tremendous advantage. Not only will they know the ins and outs of the tax code, but also they can take over the often-exhausting job of dealing with the IRS – and help you decide how far to push the fight.

If you feel you have a bulletproof case but are getting nowhere with an auditor, stay calm – and consider asking to speak to that person’s manager. If that doesn’t help either, consider taking your case to an IRS appeals office. An IRS publication says, “most differences” between taxpayers and the IRS that reach the appeals level are settled. For details see IRS publication 556 and below:

The IRS Mission

Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.


Penalty for filing erroneous claim for refund or credit. You may have to pay a penalty if you file an erroneous claim for refund or credit. See Penalty for erroneous claim for refund, later under Claims for Refund.

Interest and penalties suspended if notice not mailed within 36 months. If you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you within 36 months. See Suspension of interest and penalties, later under Examination of Returns.

Fast track mediation. The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from:

Examinations (audits),

Offers in compromise,

Trust fund recovery penalties, and

Other collection actions

You may also consider taking your case to the IRS Taxpayer Advocate Service, or TAS, an organization within the IRS created to help taxpayers resolve problems, as well as advocate for changes within the system.

You may be eligible for help if you have tried to resolve your tax problems through normal IRS channels and haven’t gotten anywhere, or if you believe an IRS procedure isn’t working as it should, such as an amended return that hasn’t been processed, as advocate spokesperson says.

If you are facing a financial crisis and have no hope of repaying everything you owe, consider asking the IRS to settle for some lesser amount.

Specifically, IRS employees “will be permitted to consider a taxpayer’s current income and potential for future income when negotiating an offer in compromise,” the IRS said. “Normally, the standard practice is to judge earnings in prior years.”

By Lance Wallach, CLU, CHFC
Abusive Tax Shelter, Listed Transaction, Reportable Transaction Expert Witness
Mr. Wallach, CLU, CHFC, is a leading speaker on accounting and taxation topics and the author of numerous AICPA CPA exam publications. In addition to developing CPE courses, he is also a member of the AICPA faculty of teaching professionals, and has been featured in the Wall Street Journal, the New York Times, Bloomberg Financial News, NBC, National Public Radio’s All Things Considered, and other radio talk shows. Mr. Wallach is listed in Who’s Who in Finance and Business.

Copyright Lance Wallach, CLU, CHFC

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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