“How to Represent Your Client in a 1040 Audit & CP2000 Issues” “AUDITS” “How to Represent Your Client in a 1040 Audit & CP2000 Issues” LG Brooks, BA, EA, CTRS February 14, 2017 Michael Rozbruch's Tax & Business Solutions Academy 1

Michael Rozbruch's Tax & Business Solutions Academy Scope of the Audit Scope – District Office and/or Campus “Classifiers” determine the scope (issues) of the Audit Focus should be applied towards the “audit/exam issues” indicated via the initial appointment letter. Michael Rozbruch's Tax & Business Solutions Academy 2 2

The Assessment Statute ASED - Assessment Statute Expiration Date Tax required to be assessed generally within 3 years after filing Assessment includes Tax, Penalty & Interest Legal Cite: IRC §6501(a) & Treas. Reg. §301.6501(a) -1 Michael Rozbruch's Tax & Business Solutions Academy 3 3

Information/Documentation IRS Information – The practitioner should secure all “relevant” info from the IRS for the tax year in question such as: Wage & Income Transcripts Record of Account (Account & Return Transcript) TxMODA Transcript Form 4564-Information Document Request (IDR) Michael Rozbruch's Tax & Business Solutions Academy 4 4

Interview of Client-by Rep Client Interview : “Thorough & probing” (See NOTE below) Document any “exposure issues” identified Utilize interview to fully develop all “facts & circumstances” of the exam year or years NOTE: During the interview limit the TP’s ability to disclose potentially “fraudulent/criminal” issues Michael Rozbruch's Tax & Business Solutions Academy 5 5

Interview of Taxpayer by IRS Agent Taxpayer Interview : Decision to allow s/b made on a “case-by-case” basis Goal of examiner is to identify any “discrepancies, fraud, inconsistencies, underreported income, etc. Your “thorough & probing” interview should limit the impact of the Auditor demanding the appearance of your client Michael Rozbruch's Tax & Business Solutions Academy 6 6

Michael Rozbruch's Tax & Business Solutions Academy Type Audits Correspondence Audits-Tax Auditor (TA) Office Audits-Tax Compliance Officers (TCO) Field Audits-Revenue Agent (RA) Eggshell Audit-Revenue Agent or TCO CP2000-Tax Auditor or Tax Examiner Michael Rozbruch's Tax & Business Solutions Academy

Audit Exam Administration Date & Time of Exam Treas. Reg. §301.7605-1(b)(1) Place of Exam Treas. Reg. §301.705-1(d)(1) Exception for Small Business Treas. Reg. §301.7605-1(d)(3)(ii) Site Visitations Treas. Reg. §301.7605-1(d)(3)(iii) Place of Exam Change Request Treas. Reg. §301.7605-1(c)(1)(i-vi) Right of Consultation IRC §7521(b)(2) Representative Holding POA IRC §7521(c) Michael Rozbruch's Tax & Business Solutions Academy

Attorney Client/Tax Advisor-PRIVILEGE Privileged Information: Established pursuant to IRC §7525 Applies to any federally Authorized Tax Practitioner (FATP) Assertion of “privilege” applies to any “non-criminal” tax matter pending before the IRS IRC §7525 (a)(2)(B) Michael Rozbruch's Tax & Business Solutions Academy

Audit Technique Guides Created under the IRS’s “Market Segment Specialization Program” (MSSP) Provides “guidance” (road map) to examiners pertaining to various business & industries Discusses & explains-business practices, specific industry terminology, detailed analysis formats agent workpaper suggestions & requirements Michael Rozbruch's Tax & Business Solutions Academy

Michael Rozbruch's Tax & Business Solutions Academy CP2000 Issues CP2000 Notice generally informs the taxpayer of “underreported income” and/or “adjustments” to reported income The “CP2000” is a type AUDIT Publication 3498-A: “The Examination Process-Examinations by Mail” is always provided with the CP2000 Notice Appeal Rights (via Pub 5) are also provided CP2000’s are AUDITS Michael Rozbruch's Tax & Business Solutions Academy

Michael Rozbruch's Tax & Business Solutions Academy AJAC The “Appeals Judicial Approach Cultural” Project (AJAC)…..Effective September 2, 2014 Effective with the adoption of the AJAC project all “Audit & Examination” personnel are required to “Determine the statute date and ensure there are at least 365 days remaining on the statute prior to the case being forwarded to the Appeals Division”. Prior to “AJAC” only 180 days were required to be remaining on the statute …Cite: IRM §8.2.1.4 & 25.6.2.8.1 Michael Rozbruch's Tax & Business Solutions Academy

Michael Rozbruch's Tax & Business Solutions Academy 1040 Audits & CP 2000 Issues: Points of Interest/Additional Issues: ___________________________________ Michael Rozbruch's Tax & Business Solutions Academy

Michael Rozbruch’s Tax & Business Solutions Academy “AUDITS” “How to Represent Your Client in a 1040 Audit & CP2000 Issues” LG Brooks, EA, CTRS Michael Rozbruch’s Tax & Business Solutions Academy Thank you! Michael Rozbruch's Tax & Business Solutions Academy