Michael Raanan, EA
Santa Ana, CA
Male, 35
My tenure with the largest and most powerful collection agency in the world, the IRS, began fresh out of college and with much surprise. Following an extensive interview process and a cross-country flight to the West Coast, I found myself in Los Angeles with the unenviable task of getting delinquent taxpayers back into tax compliance. After approximately 8 years of service, I left, and now find myself (very literally) on the other side of the table helping taxpayers resolve their IRS disputes.
It depends on what you mean by "false return". The IRS maintains that what ends up on a tax return is ultimately the responsibility of the taxpayer. There are certain circumstances where a tax preparer can be held responsible and subject to specific penalties, however. Because of this, many scrupulous tax preparers carry professional liability insurance that will cover the costs of any such oversights.
Taxpayers themselves may also seek to have any such penalties removed based on Reasonable Cause provisions of the Internal Revenue Manual.
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Both IRS Revenue Officers and Service Center Collection employees have the authority to remove penalties and related interest. In general, this can be done in two ways. The first is through a taxpayer request based on the First Time Abatement provision. The second is a request based on Reasonable Cause. Both methods have their respective procedures and policies that the IRS must follow, including taxpayer qualification criteria. Every taxpayer has a right to request an abatement of penalties, and the IRS is required to consider all legitimate requests. Taxpayers can make such a request themselves or through their tax representative. In the event the IRS denies an abatement request, a taxpayer has a right to file an appeal.
Related:
1) 8 Facts About IRS Tax Penalties
http://bit.ly/Zf3m6f
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In general, taxpayers are required to exercise "ordinary business care and prudence" when complying with their tax obligations - a responsibility that cannot be delegated. Erroneous advice from a third party usually does not meet penalty abatement criteria, however, there may additional reasons for the penalties to be abated based on reasonable cause. See 'What to Know About Penalty and Interest Abatement': http://bit.ly/MSES89
Moreover, the avoidance of penalties is explicitly addressed in the required IRS Circular 230 Disclaimer used by tax professionals below:
"IRS CIRCULAR 230 DISCLOSURE: To comply with requirements imposed by the Department of the Treasury, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein."
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As with almost all things IRS, the fine line between tax avoidance and tax evasion is dictated by the Internal Revenue Code (IRC) and Internal Revenue Manual (IRM), among other sources. Many criminal cases arise out of civil investigations where certain 'badges of fraud' are identified and examined to determine if a case warrants further research. If a Revenue Officer determines elements of fraud may be present, he/she will typically need to gather compelling evidence supporting those findings before presenting the case to the IRS attorneys.
Related:
1) Recent IRS Investigations: http://www.landmarktaxgroup.com/taxpayer-resources/recent-irs-investigations
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Oral and Maxillofacial Surgeon
How often do people wake up during surgery?
Radio program/music director
Do radio stations have to pay royalties to artists to play their songs?
Nightclub Promoter
Is bottle service worth the money, or is it a total scam?
For fiscal year 2012:
Revenue from Individual and Business audits = $10.2 B (Revenue from each is not clear)
Total Individual Returns Audited = 1,481,966
Total Business Returns Audited = 70,265
Source: http://www.irs.gov/pub/irs-news/FY%202012%20enforcement%20and%20service%20results-%20Media.pdf
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A Revenue Officer is the last line of collection for the IRS when it comes to back taxes. After all required notices and letters have been issued by the IRS Service Center, the balance due case is transferred to a local IRS office and assigned to a Revenue Officer for review and resolution.
A timely response to the IRS is always strongly encouraged to prevent enforced collection actions, such as a tax lien or levy. This is especially true when a balance due case has been assigned to a Revenue Officer.
Since specific case matters cannot be discussed on this forum, please contact Michael at michael@landmarktaxgroup.com or 1-714-382-6780 for a FREE consultation and immediate feedback on your individual case.
Related:
1) 11 Tips for Taxpayers Who Owe Money to the IRS
http://bit.ly/18hk5ce
2) How the IRS Taxpayer Advocate Service Can Help You
http://bit.ly/1hMZmAi
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The IRS has options for taxpayers that are faced with severe financial and personal hardship, most notably the Currently Not Collectible program. If, after a financial review by the IRS, the agency determines that a taxpayer cannot make any payments towards a tax liability, they will place the account in CNC status and cease all collection efforts. It should be noted that the tax liability will continue to accrue penalties and interest and that the IRS still has the right to resume collection efforts in the future should the facts and circumstances of the taxpayer's case change.
Related: Getting Help from the IRS Taxpayer Advocate Service: http://bit.ly/1hMZmAi
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