Discussion:The Case of the Forgotten Audit (...hopefully)

What should I do? Is there a period of time that I can wait out and then demand that the audit be closed due to inactivity?

TxSrv, Are you out there?

Years ago, an audit case of mine was transferred from North Jersey to Philadelphia. Back then it could take 4-6 months to affect the transfer, and the audit letter was issued perhaps 16 months after the close of the year. I took one look at the documents I was given and realized a large assessment was coming. It was an office audit and a date was scheduled. The auditor's name was on the letter.

I knew her to be a person who always took the path of least resistance, someone who did not work that hard, but who would be thrilled to collect this money. She was also the type to ask to see the next year, and then make the same adjustments based on percentages, unless the client could prove otherwise.

I called the client to see if he had any more documents to give, and when this response was negative, I hatched a new strategy. I suggested he write the auditor and tell that person he did not want me to handle the matter, and would she please send the case back to north Jersey. I told him there was a fair chance the case would arrive back so late that they would drop it, but warned him that if the auditor asked him to sign a form extending the statute, he would have to sign it. I thought it a worthy gamble to count on the auditor not asking for more time before she sent the case back.

Two weeks later he received a letter from Philadelphia telling him the case was being transferred to Edison or Clark or some place like that, and there was no extension to sign. He never heard another peep; the Statute expired and all was well. The only problem I had was how much can one bill for suggesting that he be fired as the professional?

In my exp. it was rare for a representative to inquire of management on a dormant case, except for refund claims or preparation of the current year is a serious problem if audit results unknown. You can ask the agent, but usually not a productive inquiry if as typical, other work has higher priority. Asking management (directly, or worse, thru Taxpayer Advocate shop) can trigger a review of the case to make sure all significant issues are being considered.

Conversely, the older it gets, the more management will likely direct the agent to trim the exam scope to get it closed soon.

Anytime the first response to a problem is to call the Taxpayer Advocate - you can be certain of inexperience. The TAO is not your mommy. Use it only when you have exhausted the normal channels to resolve a problem or a real hardship or potential hardship exists!

Yes indeed, but normally the case would be firmed up to the point where additional tax is backed up with evidence in IRS possession, meaning the representative would have some clue of serious fraudulent tax, and multiple-year/related return exams included also. After acceptance by CID, IRS is very usually getting no more records or t/p statements. The poster's situation don't sound like this to me.

Ouch, I'm glad you guys are here to learn from.

http://www.nctimes.com/articles/2007/10/30/news/sandiego/13_49_1110_29_07.txt

I was told this included delaying requests of information for audits by an IRS agent.

I just had a payroll tax penalty waiver appeal referred to the Taxpayer Advocate. Client sent in appeal request in mid August. IRS letter had indicated they would get back to client within 60 days. Here we are about 250 days after the request with no additional response. IRSfixer, will you provide a little more information on why you say it is a last resort? By the way, this was the next step my client was suggested to take by an IRS staff person.

The rule of thumb in non-hardship cases is that you have tried three times to resolve your problem with no results. In case where time is of the essence, I would have less patience. I am also more prone to use them for systemic problems where things can get lost in the blackhole of the Service Center. They have TAO units at the Service Center to deal with those type problems.

In the original problem, if you really wanted to get the audit going, you would contact the auditor first, then the auditor's supervisor.

A former colleague of mine went to work for a local company. The company had had a unitary audit several years before, had filed a timely protest, received some additional correspondence from the hearing officer, and responded to that with a stack of additional documents about two inches deep. Then they never heard any more. Several years later the company received a letter from another hearing officer saying, gee, we're sorry it took so long to get back to you, but please provide the following information ... followed by a long list of questions requesting excruciating additional detail. My friend called me and we sent a letter back to the hearing officer (whom I happened to know) saying (1) you have all the information you need to make a determination of which entities are and are not part of the unitary business group, and (b) if you do not withdraw the NPA based on that information, we will need at least six months to prepare for an oral hearing of the protest. No one who was working in the tax department of the company at the time of the audit, let alone during the audit period, was still there, and it was a complicated factual situation. Evidently the FTB's file had fallen behind a filing cabinet somewhere!

The NPA was withdrawn. But if the hearing officer had insisted, he could have forced us to go to an oral hearing.

Of course, he's still got his criminal case to fret about, but that's another issue.