For any Circular 230 tax professional who has been in the business for any length of time inevitably they will acquire an inventory of taxpayers under CAF Authority. The IRS has stated they are working on a CAF Management System as part of E-Services to help the tax professional manage their CAF Authority Inventory.
Currently the only way to get a list of your CAF Client Listing is to do a Freedom of Information Request to the IRS. They even have a pre-formatted sample letter:
Bill Nemeth, EA
Bill Nemeth, Enrolled Agent shares his success in getting First Time Penalty Abatements using the Audit Detective Transcript Analysis Software to identify those clients that qualify. Once he gets CAF Authority on a taxpayer he uses the Audit Detective ProPlus Software to request, download and create a Transcript Analysis Report in as little as 5 minutes. In the past 6 weeks he has successfully recovered over $20,000 in penalties for his clients.
Bill advises the Transcript Analysis Report allows him to understand the client’s entire tax situation. When pulling individual transcripts he is only able to see what’s happening with that year.
If you would like to get a list of all the taxpayers you have CAF Authority on, check out this article: Get Your CAF List From The IRS
The IRS has a tool called the Reasonable Cause Assistant (RCA) which provides an option for penalty relief for the Failure to File (FTF), Failure to Pay (FTP), and/or Failure to Deposit (FTD) penalties if certain criteria are met.
TIGTA recently performed an Audit on the Internal Revenue Service CSED operations titled “Recalculations of the Collection Statute Expiration Date Were Not Always Accurate”. According to the TIGTA Audit, “the National Taxpayer Advocate has reported miscalculated CSEDs as one of the most serious problems encountered by taxpayers.” According to TIGTA, manually recalculated CSEDs showed 39 percent of the samples contained errors. These errors included both inaccurate CSEDs and missed the required documentation to support the CSEDs. The bankruptcy calculation accounted for most of the errors.
This post will show you how to obtain the CSEDs from the IRS, calculate the CSED from the Account Transcript, and request a recalculation from the IRS. It will also show you how the Audit Detective Transcript Report Processor can help the tax professional calculate CSEDs.
How can this information be best leveraged by you, the tax professional? Let’s start by looking at the CSED Calculation. The Collection Statute Expiration Date (CSED) ends the Government’s right to pursue collection of a tax liability and is generally 10 years from the tax assessment date. This seems simple enough yet at the IRS it’s the exceptions that make it complicated. The following transactions all have their own CSED (per IRM 126.96.36.199):
TC 150 Tax return filed
TC 160 Failure to File – Manually Computed Delinquency Penalty
TC 166 Computer Generated Failure to File Delinquency Penalty
TC 170 Estimated Tax Penalty Continue reading
The IRS announced today they will be releasing a new “Get Transcript” Service for taxpayers allowing them to go online, verify identity, request and download their IRS Tax Transcripts. (Note: all the reference material for this post are listed and linked at the end)
From the IRS:
New “Get Transcript” Service
Early in 2014, a new online request option called “Get Transcript” on IRS.gov will allow individual taxpayers with an SSN to instantly view and print a copy of their tax transcripts. With Get Transcript, taxpayers will save both time and effort. When the new service is available, transcript requests will generally be referred to the online tool. Taxpayers will be able to use the tool to authenticate, view and print copies of their transcript in one session. Taxpayers will still also be able to request that a transcript be mailed to their address of record by using the existing online tool or sending in Form 4506T. A specific date when Get Transcript will be available will be announced early in 2014.
The tool will be available for five types of transcripts: tax account, tax return, record of account, wage and income, and verification of non-filing. Continue reading
Today the IRS announced they were “Retiring” two E-Services Products; EAR and Disclosure Authorizations. EAR is basically an E-Mail inquiry system to the IRS about a client’s account and the Disclosure Authorization allows Enrolled Agents, CPA’s, and Attorneys to electronically file POA requests giving them near instant access to download clients IRS Transcripts.
The IRS cites low usage but every tax professional I know uses the system and finds both of them invaluable. The alternative is to manually call the IRS, stay on hold for an average of 22 minutes (of course those times will go up if more people have to call in), and then wait three business days to get access to download the transcripts.
We all know the IRS has an infinite budget and would rather spend it on payroll than an automated system. In all seriousness, I believe the system would get used more if it was easier to use. It is the most unfriendly system to use and it is near impossible to get signed to use E-Services without at least one phone call to the Help Desk.
Rumor does have it the decision may not be final yet so I hope the NAEA and NATP can lobby to keep this system in place.
The article just released by CNN Money, Tax audits: 78% are done by mail, not in person advises , “That is a 13% rise in audits-by-mail from 2009, and a 93% jump compared to 2003.” The article goes on to report that the Tax Payer Advocate Service advises more than 25% of the people who were audited for the Earned Income Credit did not even realize they were being audited and 40% did not understand the information the IRS was asking for.
The IRS is doing more correspondence audits because they are cheaper than a face to face audit (field audit). This is where we believe Audit Detective’s automated Transcript Analysis can be used effectively in the years to come. The IRS is using the computing power of their computers to identify issues withyour return so why wouldn’t you use the same power to not only help with finding issues but to also find errors that may be in your favor.
Believe it or not the IRS does not list all of the IRS Notices and Letters on the same page. Some cannot even be located in the search bar on their web site. In the process of running transcript analysis we have discovered and been able to define some of those not listed. We have assembled all of these Notices and Letters with their definitions on our website. You are welcome to use this link IRS Notice and Letter Definitions. We have even included the links from each of our definitions to the IRS web page for each Notice or Letter. The IRS offers explanations and even advice on how to resolve some issues when these are received.
During our initial roll out I have been advised by two different tax preparers that they were able to locate missed deductions using the Audit Detective Transcript Analysis. We are working with those tax specialists to see if we can post the details of how they used the product to find these missed deductions.
This has added a new dimension to our product. Originally we thought it would be utilized as a reactive product to tax issues. We have quickly come to realize that the concise way the data is presented anomolies are quickly located that can be established if they were in error or not.
We are truly excited that our product has become a proactive tool that will benefit both tax professionals and the tax payers.
I would like to take time to congratulate Hansley Cook on passing his Enrolled Agents Exam. This was not an easy process and I know he spent countless hours studying and preparing for this test. Hansley is currently in the process of sending his paperwork to the IRS for his authorization approval.
Many people have not heard of an Enrolled Agent before so those who do not know what this is here is the definition from the National Association of Enrolled Agents (NAEA):
An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.
Again, congratulations to our Marketing Director, Hansley Cook.
As more and more customers turn to online filing you will see an increase in audits from the IRS. For years the IRS has blamed the big retail tax chains for the tax gap. Over the past few years there has been a shift from the paid preparer market to self-prepared online filing. I see more fraud and mistakes being done online than through paid preparers. I know from personal experience running a medium size retail tax chain over the past 5 years that people file what they think will get them a bigger refund as opposed to what is correct. I have used online software to do practice returns and talked to people who prepare returns with online tax software and they all advise the same thing. The refund toke board on online tax software is what drives the answers. The refund toke board is the refund tally estimate that changes every time information is added or taken away from the return. The software also encourages and trains the Continue reading