Discussion:Is Tax Advocate helping or hurting my client

Here's the issue - an IRS Tax Advocate told the client the IRS is now "accepting the original return" and that he (the Advocate) would see about canceling the Tax Court appeal and get the funds back that were submitted with the 1040X. Then i was given the red light from them on amending their 2005 and 2006 returns which were similar to the 2004. Mind you, they have yet to receive any final judgment or determination from the IRS on 2004. My concern is: they may be held liable if the tax advocate is incorrect. My question is: has anyone had instances where the advice of IRS Tax Advocates counters your advice? Also, am i missing something here? The company clearly deems the client as a regular employee, so shouldn't these be Schedule A deductions subject to the 2% floor?

I believe that if a timely petition was filed, the Advocate's office cannot withdraw it, but rather this must come from the taxpayer, but others here know better.

There are two issues here: Why did the TA's office pick up the matter, and the appeal to the TA makes no sense in this case; either file the darn petition and wait for a hearing with an Appeals officer, or ask the case be sent back to audit. Twice I have had 90-day notices rescinded, though not recently, and even recission might not be necessary if the matter is cut and dry, i.e. expenses documented but in the wrong place on the return. A payment could be as a Deposit in the Nature of a Cash Bond to limit the exposure to interest.

Anyone remember the Problem Resolution Office that came before the TA; they were usually a waste of time in matters such as this.

I'll do my best to explain this to my client but if they continue to seek advice from the TA that comes back to bite them, that's on them. I just want to make sure i cover my liability by exercising my due diligence.

If the opinion from the IRS Tax Advocate was only verbal, oh well, we all hear what we want to hear!

Snowbird 16:23, 27 January 2008 (CST)

That is why I would be interested in the opinion of an attorney. It would seem that the TAX Court is more technical and the District Court more protection against the arbitrariness of government agencies. It may be a dumb idea to go to court at all, but I see so many references to inconsistancy of information from the IRS ... that is a decision for an attorney not an EA. Rather than giving advice, I was asking a question about use of courts.

However, I do agree that this type of thing is not the preview of the Taxpayer Advocate. If you look at Pub 556, it states "Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review." But, what if the Advocate over steps his authority.

This is what happens when people do things on the cheap.....and I am not trying to criticize our poster, except that he could have been more emphatic in saying "I did not prepare the return so I cannot represent you at audit, nor can I go to appeals because I have no credentials." Did he really think IRS was going to accept 30K in deductions without an examination? Sometimes professionals think a 1040X is the cure for everything.

IRSFixer is right; this is a simple Tax Court matter; it is possible that the client can take Phoenix with him to a meeting with the Appeals Officer assigned to the docket number, so he can present his documentation [several times when I have done this, the Appeals officer has sent for an examiner to go over the information], but if the result is not to the liking of the client, he will need real firepower to go forward.

D&T is right, the swing is based in part on the AMT kick-in. Also, Additional Child Tax Credit was not moved to regular Child Tax Credit in the IRS examination. So basically, IRS was essentially correct about moving the $36,000 to Schedule A, they just needed more information; BUT in their Explanation of Items response, the TP provided mis-information.

Yesterday i found out more information about the TP contact with the IRS that TP didn't mention before. IRS didn't respond to the TP's EOI, except for issuing the NOD. The Client conferred with the TA who suggested the NOD was sent prematurely. Again, all this occurred before i entered the picture. I urged the TP to submit the 1040X (with my name checked as a contact) in November (i even gave them a stamped envelope so there would be no excuses not getting it in), then submit the petition in December indicating the 1040X was submitted. That way i could represent them on their 2004 w/out a POA. They sat on the 1040X throughout December (after i made repeated follow-ups for them to get it in), so now we're waiting to see what transpires with the Appeals Officer.

Actually, that is what i told them. That's when i referred them to the firm i work for (as an auditor) so they could get full representation. They chose otherwise. The good thing about the TP is that the husband keeps very good, detailed records about his work expenses, and they were not at all concerned about having to show their support for the deductions if necessary.

Of course, he is permitted to give the clerk information, even if they cannot discuss the case without a POA.

It appears that there was more than enough time for PhoenixTax to amend the 2004 return and get it accepted without having to file a Petition. Certainly there was adequate time to contact the 90-day clerk and determine what happened with the amended return prior to filing the Petition.

We've had several cases where amended and original returns were accepted after an NOD was issued and no Petition was ever required.

The last day for filing the Petition should have been January 7, 2008. Why file the Petition early? If you had gotten the result you wanted, there would have been nothing to do.

Meanwhile, I wholeheartedly concur that there was NEVER any role for the Advocate at any point in this case. As has been pointed out by others, the Advocate cannot cancel the filing of a Petition and frankly it may not have been needed at all.