1. “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
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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.
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3. 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. § (a) -1
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4. 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)
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5. 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
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6. 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
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7. 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
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8. Audit Exam Administration
Date & Time of Exam Treas. Reg. § (b)(1)
Place of Exam Treas. Reg. § (d)(1)
Exception for Small Business Treas. Reg. § (d)(3)(ii)
Site Visitations Treas. Reg. § (d)(3)(iii)
Place of Exam Change Request Treas. Reg. § (c)(1)(i-vi)
Right of Consultation IRC §7521(b)(2)
Representative Holding POA IRC §7521(c)
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9. 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)
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10. 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
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11. 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
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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 § &
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13. Michael Rozbruch's Tax & Business Solutions Academy
1040 Audits & CP 2000 Issues:
Points of Interest/Additional Issues:
___________________________________
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14. 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