{"id":1243,"date":"2018-09-25T06:08:43","date_gmt":"2018-09-25T10:08:43","guid":{"rendered":"https:\/\/www.harringtonlawassociates.com\/?p=1243"},"modified":"2019-05-21T14:16:13","modified_gmt":"2019-05-21T18:16:13","slug":"tax-controversy-part-i-overview-2","status":"publish","type":"post","link":"https:\/\/myhlaw.com\/es\/tax-controversy-part-i-overview-2\/","title":{"rendered":"TAX CONTROVERSY: PART I \u2013 OVERVIEW"},"content":{"rendered":"<h3 style=\"text-align: justify;\">So, you\u2019re having some trouble with the IRS or the Department of Revenue.\u00a0 They are challenging something(s) in your return, and now you are faced with hours of time and energy dealing with one or both of those offices.\u00a0 Depending upon where you are in the process, you will likely work with an accountant, a tax attorney or both.\u00a0 The purpose of this article is to provide an overview of the process, which is referred to as \u201ctax controversy,\u201d so you will have an idea of what to expect and can make wise, cost-effective decisions about how to proceed.<\/h3>\n<p style=\"text-align: justify;\"><em>Let\u2019s face it.\u00a0 Once you receive notice of some problem with your return, your first thought is to get the controversy over with as quickly and inexpensively as possible, right?\u00a0<\/em><\/p>\n<p style=\"text-align: justify;\">Of course you do.\u00a0 You don\u2019t have time for this.\u00a0 The tax authorities know you do not have time or patience, and they may give you the quick and easy option, which is to just accept their changes and pay the assessment.<\/p>\n<p style=\"text-align: justify;\"><em>If you are okay with the proposed change(s), you may be better off taking this route.\u00a0 If you are reading this article, however, you likely are unexcited about the price tag and\/or you think the tax authority\u2019s position is clearly wrong.<\/em><\/p>\n<p style=\"text-align: justify;\">So, now you need to consider putting up some resistance.\u00a0 Here are the stages.<\/p>\n<ul style=\"text-align: justify;\">\n<li>\n<h3><strong>Audit: 30-Day Letter<\/strong><\/h3>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">It starts with the examination phase.\u00a0 The tax agent has flagged your return and sends a letter (i) stating the issues of concern, and (ii) requesting supporting documentation.\u00a0 At this stage, things are ostensibly friendly.\u00a0 You can send in the additional information, you can ask for a office\/ phone conference with the reviewing tax agent, and\/or you can discuss the matter with the examiner\u2019s supervisor.<a href=\"http:\/\/info.harringtonlawassociates.com\/blog\/tax-controversy-part-i-%E2%80%93-overview\/#_ftn1\">[1]<\/a><\/p>\n<p><iframe title=\"HLA: Business &amp; Real Estate Attorneys\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/oQyWbtV1xWI?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p style=\"text-align: justify;\">\u00a0This is the first time you will have to consider working with a <a href=\"http:\/\/info.harringtonlawassociates.com\/blog\/real-estate-investment-defer-taxes-with-1031-exchange\">professional<\/a>.\u00a0 You definitely should make the accountant who prepared the return aware of the review without delay.\u00a0 The accountant will tell you how much or how little he\/she can do and the cost of the extra work.<\/p>\n<p style=\"text-align: justify;\">Now, if the accountant made a mistake with the return, which is what caused the file to be flagged, then you might expect the assistance to be provided at minimal or no expense to you.\u00a0 The question is whether or not you will know if it was the accountant\u2019s mistake . . .<\/p>\n<p style=\"text-align: justify;\">You want to control the expense of this process, so do have that important conversation with your accountant and discuss the most expedient way to get it over with.\u00a0 Just bear in mind some important limitations:<\/p>\n<ul>\n<li style=\"text-align: justify;\"><strong>Your accountant is not an attorney<\/strong>.\u00a0 None of your communications with the accountant are privileged.\u00a0 Whatever you reveal to your accountant is \u201cdiscoverable,\u201d which means the IRS can force the accountant to disclose documentation you have provided and, even, the contents of discussions you have had.\u00a0 There is no confidentiality.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong>\u00a0<\/strong>That is why a lot of accountants are reluctant to give tax advice\u2014which only an attorney can do\u2014or even delve too much into strategy decisions.\u00a0 By and large, accountants prefer to be \u201cbean-counters\u201d who simply put the information you provide them into the correct forms.\u00a0 It just makes sense.\u00a0 They cannot afford to expose themselves to liability.<\/p>\n<ul>\n<li style=\"text-align: justify;\"><strong>Flow of Information.<\/strong> \u00a0\u00a0An attorney has the authority and expertise to determine what information can properly be withheld from the tax agent.\u00a0 Naturally, you want to control the costs related to getting through the audit, but you should also give careful consideration to controlling the information provided to the tax authority.\u00a0 Your accountant may want to turn over anything and everything and is probably not going to give you advice about the possible consequences of disclosing the information. \u00a0Even tax planning attorneys are typically unfamiliar with rules of evidence and procedure. \u00a0That is fair enough, they are not <a href=\"https:\/\/myhlaw.com\/areas-of-practice\/business-disputes\/litigation\/\">litigators<\/a>. \u00a0They do not deal with that part of tax practice.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">The suggestion here is not that you immediately seek out a tax litigator for representation in the tax controversy, but you do need to make a conscious risk-reward analysis.<\/p>\n<p style=\"text-align: justify;\">If it appears you are in for a long haul, or that failing to control the flow of information will broaden the scope of the investigation\u2014thereby opening the door to much greater liability\u2014then you would certainly benefit from an initial consultation with an attorney before you start turning over documents to the tax agent.<\/p>\n<p style=\"text-align: justify;\">In any event, you will go back and forth with the examining agent and either come to an agreement or not.\u00a0 The agent will send you what is commonly referred to as a \u201c30-Day Letter.\u201d<a href=\"http:\/\/info.harringtonlawassociates.com\/blog\/tax-controversy-part-i-%E2%80%93-overview\/#_ftn2\">[2]<\/a> \u00a0If you accept the terms in the letter, then the experience is over\u2014for that year, at least\u2014and you will be a little wiser in the future.<\/p>\n<p style=\"text-align: justify;\">Then again, you may not reach an acceptable resolution.\u00a0 \u00a0In that case, you have an important decision to make.\u00a0 Here are your options:<\/p>\n<ol style=\"text-align: justify;\">\n<li>Pay the assessment set forth in the 30-Day Letter, and then file a Claim For Refund;<\/li>\n<li>File a protest with the Appeals Office; <em>or<\/em><\/li>\n<li>File a petition with the Tax Court.<\/li>\n<\/ol>\n<p style=\"text-align: justify;\">Each choice has advantages and disadvantages, which will be explored in detail in the upcoming parts to this series.\u00a0 For our purposes today, just be aware of the key stages of tax controversy and the decisions you must take during the examination phase.<\/p>\n<p>~ <a href=\"https:\/\/myhla.wpengine.com\/wp-content\/uploads\/2015\/03\/Harrington-Bio_020818.pdf\">Jeff Harrington, Esq<\/a>.<\/p>\n<p><a href=\"https:\/\/myhla.wpengine.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington.jpg\"><img decoding=\"async\" class=\" wp-image-314\" src=\"https:\/\/myhla.wpengine.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington.jpg\" alt=\"International Attorney\" width=\"168\" height=\"168\" srcset=\"https:\/\/myhlaw.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington.jpg 2000w, https:\/\/myhlaw.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington-150x150.jpg 150w, https:\/\/myhlaw.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington-300x300.jpg 300w, https:\/\/myhlaw.com\/wp-content\/uploads\/2012\/11\/Jeff-Harrington-1024x1024.jpg 1024w\" sizes=\"(max-width: 168px) 100vw, 168px\" \/><\/a><\/p>\n<p><a href=\"http:\/\/info.harringtonlawassociates.com\/blog\/tax-controversy-part-i-%E2%80%93-overview\/#_ftnref1\">[1]<\/a> You probably also have the option to speak with an appeals officer, but that may be a bit premature at this stage.<\/p>\n<p><a href=\"http:\/\/info.harringtonlawassociates.com\/blog\/tax-controversy-part-i-%E2%80%93-overview\/#_ftnref2\">[2]<\/a> The document is formerly called the \u201cRevenue Agent\u2019s Report\u201d or \u201cRAR.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The purpose of this article is to provide an overview of the process, which is referred to as \u201ctax controversy,\u201d so you will have an idea of what to expect and can make wise, cost-effective decisions about how to proceed.<\/p>\n","protected":false},"author":1,"featured_media":2267,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[51,220],"tags":[179,253,175,258,259,193,174,180,251,252],"class_list":["post-1243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-tax","tag-attorney-jeff-harrington","tag-attorney-jeffrey-harrington","tag-harrington-law","tag-harrington-law-associates","tag-harrington-legal","tag-harrington-legal-alliance","tag-jeff-harrington","tag-jeff-harrington-esq","tag-jeffrey-harrington","tag-jeffrey-harrington-esq"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/posts\/1243","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/comments?post=1243"}],"version-history":[{"count":0,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/posts\/1243\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/media\/2267"}],"wp:attachment":[{"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/media?parent=1243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/categories?post=1243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/myhlaw.com\/es\/wp-json\/wp\/v2\/tags?post=1243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}