Taxpayer Advocate – Our Secret Weapon

In 1998, Congress held hearings in regards to the collections practices of the Internal Revenue Service.  The agency was under heavy scrutiny because they were using questionable collections tactics, which were, as some Congresspersons said, worse than the Mafia.  These practices included wrongfully seizing assets, wrongfully levying accounts, and horrendous harassment.  Out of these hearings came the Taxpayer Bill of Rights, and an independent agency called the Taxpayer Advocate.  The Taxpayer Advocate (TPA) is basically the police of the IRS.  When the IRS oversteps their boundaries or does not follow protocol, us practitioners go to the TPA.  I have a true story to tell you about a case I just has resolved.

A client of mine was a victim of identity theft.  It is rampant with the IRS right now, and is a major hot button issue.  My client filed his 2010 tax return in 2011.  In 2012, he went to file his 2011 tax return and learned that his return had already been filed by someone that stole my client’s identity.  My client had never filed his 2011 return so he called the IRS, and sure enough his tax return had been filed.  His official address with the IRS had been changed to an address in New York City.  He worked for a year to get this cleared up with the IRS.

In the meantime, my client’s tax return from 2010 was selected for audit.  It was a correspondence audit (meaning the audit happens where a tax examiner asks for information to be mailed in).  Because of the ID Theft, and the client’s address officially being changed to New York, my client never got the audit notice.  The IRS never received any documentation, and closed the case disallowing all of the deductions that they had questioned.  By the time the IRS assessed the tax, my client finally has his address changed back to his home in Florida, and he gets a letter stating that he owes $8,000 in additional tax from 2010.  Very confused, my client calls the IRS and finds out that he was audited, and the bill was the result of the audit.

Here is where I get got hired.  When a taxpayer is audited, he has a right to produce evidence to defend the claims that they made on their tax return.  The examiner can either accept these or not except these.  The examiner will send the taxpayer a formal notice of the changes that are being made to the tax return, and why they are being made.  A right of the taxpayer, is to appeal the decision of the examiner by asking for a formal appeal based on the Internal Revenue Code, or other reasons.  The taxpayer does not sign the change form, and has 30 days to ask for the case to go to appeals.  The Appeals Division of the IRS is a separate independent division.  When a case goes before them they weigh something called the “Hazards of Litigation.”  What that means is that they weigh the cost of the IRS fighting their position in Tax Court versus the amount of tax that is owed, and they either side with the taxpayer or the IRS.  If they side with the IRS, then they issue a 90 day letter, stating that the taxpayer has 90 days to petition the United States Tax Court.  Since my client missed all these notices, because they were going to the address in New York, he lost all of his basic rights.  Tax Crisis Center®, LLC’s trademarked slogan is Let YOUR Voice Be Heard®.  I am very big on client rights.  I am hired to preserve these rights.  The only available right that my client had at the time that I was hired was to appeal the collection of tax.  I appealed the collection of the tax, and my case was sent to an appeals officer, and all collections actions stopped.

At the appeal hearing I explained the entire story and I asked for the case to be sent back into audit so my client could get all of his rights back.  The Appeals Officer explained to me that I could ask for an Audit Reconsideration, and that if we didn’t like the outcome, we could appeal it, but we didn’t have Tax Court Rights.  I knew that already, but my thoughts were, that it wasn’t my client’s fault that the IRS was sending notices to the wrong address, so they deserved ALL of their rights back.  The Appeals Officer took all of my evidence and stated that she would make a decision in the next couple of weeks.  Three weeks later, I got a letter from Appeals stating that my client WAS NOT a victim of ID Theft, and they were disallowing my request.

I immediately filed Form 911 with the TPA Office.  A week later, I spoke with the TPA, and explained the situation.  They got the clients file from the IRS and the advocate and I worked on the case.  I am happy to say that not only did my client’s case get put back into audit, where they have ALL of their rights restored, the TPA, also fixed the ID Theft issue that was still unresolved.

When hiring a tax professional to handle an IRS issue, make sure that they know what they are doing, and will fight for you no matter how long the case goes on.  Too often in the Tax Resolution Business, these companies will take your hard earned money and do the bare minimum to resolve the case.  Be careful who you hire.

Let YOUR Voice Be Heard®