Tax Court Form

[Pacun]

IRS sent 2 letters to client and they were opened when they came to do their 2010 taxes. IRS was asking for documentation on "COGS" (materials) and "Car and Truck Expenses" (mileage). Since IRS got no reply in time, they sent letter of deficiency asking for 45K for 2008 (which I didn't prepare) and 20K for 2009 (which I prepared). Client has until August 11, 2011 to petition the tax court. Since this seems to be an easy case, I asked client to petition the court by himself and maybe the IRS will give him a chance to show the receipts to back up his Schedule C expenses. Do you think the IRS will give him a chance to show his receipts before the court date and if agreedable, the case can be closed without going to court?

I told him that he might need a lawyer to represent him if the case goes to court since my EA certification wouldn't cut it even if I get it in time.

Does any one have a good explanation for these two entries?

5. Explain why you disagree with the IRS determination in this case (please list each point separately):

6. State the facts upon which you rely (please list each point separately):

[SaraEA]

Like any litigation, the IRS would much rather resolve this without going to court. Your client definitely needs to petition the court, just to have that option open in case a settlement can't be reached. Once a case is docketed, it usually goes to negotiation anyway. Here your client can produce receipts, etc. that won't be accepted in court because the judges don't look at "new" information, only what has already been presented (in your client's case, nothing). I'd call the number on the form your client received, honestly tell them you don't know why the taxpayer didn't respond, and ask what you can do now to avoid court. My hunch is they'll be eager to set up a meeting. Good luck.

[BulldogTom]

Do not let the deadline for filing pass by. There is NO GOING BACK after the date has passed.

Your client needs to file the tax court petition on time. The case will automatically be referred back to audit for resolution. You should file your POA and make sure you are getting all the correspondence that is going to your client.

Call the IRS and get documentation into their hands right away for the claimed deductions. They will be happy to talk to you, but once the time has run to petition the tax court, you won't get anywhere at all.

The information that you rely on is the Code, regulations, and tax court cases. You need to specify where the commissioner has erred in his application of the tax law and show the evidence that backs up your claim.

Good luck. Your client needs help, desperately. You should be there for them. If you are uncomfortable with handling this case, engage a seasoned professional who has done this before to walk you through it. It is money well spent on your education.

Tom

Lodi, CA

[DavidLewisEA]

I agree totally with Tom...get the petition filed timely.

From my experience, IRS District Council is completely overwhelmed on each tax court docket, and puts a lot of pressure on the appeals division to settle the case before trial. I was an EA working for an attorney several years ago, and I settled far more cases after the petition was filed than he actually tried in tax court. This is probably the easiest time to settle issues with the IRS.

Definitely meet with the Appeals office as soon as possible after filing, and present the documentation. They will "stipulate" to the documentation, and state whether they agree that it is sufficient or not. This stipulation of facts will become part of the court record, should the case actually ever go to trial.

Good luck!

[jainen]

>> call the number on the form your client received, honestly tell them you don't know why the taxpayer didn't respond, and ask what you can do now to avoid court.<<

Do not do this. Do what Tom and David say. If you call, IRS will simply tell you to send in the information for further review. Meanwhile they will NOT suspend the Notice of Deficiency, so the deadline will pass and the tax debt will be locked in. You MUST file the Tax Court petition. Then like Tom says it will be referred back to the Appeals Division, and everything will work out fine.

[Pacun]

Thank you for your replies. I will ask the client to pay the $60 for the tax court and once docketed, I will check with the IRS.