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Answering Tax Audit FAQs With Joshua D. Brinen

Jun 28, 2023 | Tax

What is an information document request?

An information document request is a formal notice from the Internal Revenue Service. During an audit in which the Internal Revenue Service personnel, be they an agent or an officer, will request information from the taxpayer for the purposes of conducting the examination. It has the force of law just like a subpoena and should be respected accordingly. Once you receive an information document request, you should contact your tax service professional, be they a certified public accountant or tax attorney, have them address each and every document request in an organized fashion and return to the Internal Revenue Service as quickly as possible.

What is the Taxpayer Bill of Rights?

At the initiation of an audit or other examination. The Internal Revenue Service through its personnel, be they an IRS agent or an IRS revenue officer, should inform the taxpayer of the Taxpayer’s Bill of Rights. While this may seem like a joke, the Taxpayer’s Bill of Rights does protect the taxpayer from potential abuse by the Internal Revenue Service and its personnel. The IRS Bill of Rights includes the rights to be informed to quality service, to pay no more than the correct amount of tax, to challenge the IRS position and be heard, to appeal an IRS decision in an independent forum, to have an audit be final, to privacy, to confidentiality, to a fair and just tax system, and possibly the most important right, the right to representation. Once you are represented before the Internal Revenue Service, the Internal Revenue Service’s personnel should not directly contact you. The one caveat is that while the IRS personnel will not contact the taxpayer on the phone, if that taxpayer is represented, the IRS will copy the taxpayer on all notices, letters, and determinations, and tax bills.

What happens at the conclusion of an audit?

At the conclusion of an audit the taxpayer or the taxpayer’s representative if the taxpayer is represented before the Internal Revenue Service will receive an audit report. That audit report will be Form 45/49, Report of Income Tax Changes, and they will often attach a Form 886-A, which is the explanation of the items. The Form 886 provides you a detailed explanation of the changes to the individual items. E 45/49 provide you with what changes were made and why. It is important to review both forms for accuracy and correctness. If you agree with the changes, you can either pay the tax due if you are able enter into an installment plan, if you can pay the tax but need to pay it over time or enter into an offering compromise if you can never pay the taxes due. These forms will not only include the change to tax, but will also include interest and penalties and detail the penalties that you are being assessed.

What is an installment agreement request?

If you are unable to pay your tax when due either on the filing of the tax return or at the conclusion of an audit or the submission of an offering compromise, you can ask the Internal Revenue Service to pay your tax over time. Now, when you ask for time and terms, those time and terms are not free. There is a fee that you pay to the Internal Revenue Service and a small amount of interest on the balance as you pay it over time. The Internal Revenue Service falls under the rubric of the Department of the Treasury, and these are the people in the government who are good at math and with money, and they will want their interest on that loan that they are making you to pay your taxes.

If you are seeking time and terms after you have been audited or you submit your tax return and cannot pay the balance in full, you will need to file a Form 9465, the Installment Agreement Request. If it’s below a certain number, all you need is the Installment Agreement Request. If it is above a certain number and that number is adjusted annually for inflation, you may be required to file a Collection Information Statement, or Form 433. Once submitted, you should immediately begin making payments on the payment plan even if you haven’t received the official notice of approval. This will build goodwill with the Internal Revenue Service and may lead to a favorable determination or favorable consideration if the installment agreement is reviewed.

What is the partnership tax regime?

In 2015, Congress enacted a Bipartisan Budget Act. This required partnerships to designate certain people with certain functions within their partnerships. By partnerships, I do mean any entity that is taxed under Subchapter K of the Internal Revenue Code, that could be a partnership or a limited liability company. These entities all file Form 1065 with the Internal Revenue Service. For partnerships that filed tax returns after January 2018, the partnership must designate a partnership representative, that partnership representative is the person who may discuss matters with the Internal Revenue Service. The partnership representative used to be called the Tax Matters Partner, for reasons that are unknown to this office they just changed the name. The function is still the same. The taxpayer’s representative or partnership representative communicates with the Internal Revenue Service. Under this new partnership tax regime the individual partners are not audited, but the partnership as a whole is audited and all tax interest and penalties are assessed at the partnership level. This is an election that can be elected out of on the Form 1065. Partnerships may elect to push out the adjustments underlying the audit report instead of paying it directly from the partnership.

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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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