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Demand for CPA Audits Explode
Demand for CPA Audits and Reviews Expected to Explode
Author Sidney Kess, CPA, J.D., LL.M
Income Deferral Strategies
In 2013, there is a new, harsher tax landscape for high-income taxpayers. The top rates on ordinary...
Retirement Income Can Impact Medicare Surtax on Net Investment Income
Taxes and Retirement Income Individuals may receive a variety of income when they retire. Different...
22 Tips That are a Win-Win for College Savings Plans
The cost of tuition and related costs are continuing to rise at a greater pace than the rate of inflation,...
15 Tax Relief Tips for Casualty Event Victims
This year has seen the occurrence of dramatic casualty events across the country, from tornados in...
Uncertainty in Business Tax Planning
As summer wanes and autumn arrives, businesses and their owners would like to plan now to save on...
Tax Changes for 2012 and 2013 Resulting from Health Care Law
The U.S. Supreme Court declared the individual mandate in the Patient Protection and Affordable Care...
Employees Tax Obligations
Do you or your clients have household help? A nanny or babysitter? Cleaning person, domestic worker,...
The Sid Kess Approach
I have had the honor of meeting and shaking the hands of several well-known people over the years....
Tax Tips for 2012 and 2013
Estate and Gift Taxes: 2012 and 2013 Estate and gift tax planning in the era of uncertainty is very...
Inflation Adjustments for Tax Rules in 2012
Tax rules change annually due to legislation, court decisions, and cost-of-living adjustments (COLAs)...
Spring 2013 Statistics of Income Bulletin Now Available
WASHINGTON — The Internal Revenue Service today announced the availability of the spring 2013...
Apple's dirty little tax secret
Cathy Kearney, an accountant in the Irish city of Cork, lives with her husband and children in a large,...
IRS Should Take More Aggressive Action to Address Travel Card Misuse
The IRS Should Take More Aggressive Action to Address Travel Card Misuse WASHINGTON – Although the...
CPAs Hard to Find for SSAE 16/SAS 70 Audits
Service Organization Control (SOC) engagements are seen as a growth area for CPA firms. John McLaughlin,...
CPA Fraud Examiner
Robert Gralla is a CPA, Certified Fraud Examiner and Certified Forensic Accountant who has experience...
4 Tips on Bond Portfolios for Tough Times
The extraordinary measures taken by the United States Federal Reserve to stimulate employment growth...
Crowdfund & Small Firm Auditing
The signing of the Jumpstart Our Business Startups Act (JOBS Act) in April of this year has put the spotlight...
Crowdfund CPA Audits & Reviews Expected to Explode
The need for CPA audits and reviews is expected to explode based on the Jumpstart Our Business Startups...
A Sit Down with IRS Commissioner Faris Fink
As part of the ongoing series to learn more about the faces of the IRS, CPA Magazine Editor T. Steel...
Preparing With The Tax Stars
Gail Rosen, CPA, is president of Gail Rosen, CPA, PC in Martinsville, New Jersey. She has been a practicing...
Author Julie Welch, CPA/PFS, CFP
Avoid 50% Penalties on Distributions From Your Retirement Plan
When it comes time to withdraw money from a retirement plan, you should consider both nontax as...
Don’t Assume Social Security Benefits Are Taxable
Up to 85% of Social Security benefits can be taxed. However, it is possible that no Social Security...
23 Year-End Tax Tips
Time Your Income and Deductions - Accelerate income in light of the elimination of the Adjusted...
10 Ways the American Opportunity Tax Credit Reduces College Cost
The costs of higher education may be offset with two credits: the American Opportunity tax...
Capital Gains for Noncorporate Taxpayers - 2012
Julie Welch (Runtz) is the Director of Tax Services for Meara, King & Co. She graduated from William...
Consider the Ways to Get Money Out of Your Retirement Plans
Periodic Payments Many retirement plans allow you to take annuity payments. For example,...
Deduct Your Tax Return Preparation Fees Against Your Business Income
Many people cannot deduct their tax return preparation fees because the fees are miscellaneous...
Tax Action Plan 2012
Use this Tax Action Plan to note the ideas that will benefit clients now. Income 1. Take advantage...
Reducing Tax Investing In Rental Real Estate
Although the deduction of most “passive” losses is limited, you can reduce your taxable income...
Deducting Your Client's Home Office Expenses
Generally, the only expenses you can deduct for your home are interest and real estate taxes. However,...
Author Martin M. Shenkman, CPA, MBA, PFS, J.D.
Life Insurance Planning Post-ATRA
Insurance has, and will always remain, an integral part of many estate plans, regardless of the status...
CPA's Role in Estate Planning Post-ATRA
Introduction SALY (same as last year) can be a recipe for disaster if you don’t verify the...
21 Tips for S Corporations with Trusts and Estate Shareholders
There are over two million S corporations. In 2012 there has been a tremendous shift of wealth to...
10 Tax Tips on Reimbursement and Ways You May Access Assets in a Domestic Asset Protection Trust
If you are considering making large gifts in 2012, you may be concerned about whether you can have...
13 Tips On 2012 1040s Impact of 2012 Gift Planning
2012 was one of the most significant years in estate planning history. While the outcome of the election,...
LLC Checklist
LLCs are ubiquitous in planning but there are a myriad of tax issues and complications in spite of...
Handling 2012 Gift Tax Audits at the IRS Appeals Level
Introduction How you plan and address the avalanche of 2012 gifts, the filing of 2012 gift tax returns...
Checklist: FLP and FLLC Planning
Introduction Family limited partnerships and family limited liability companies (collectively,...
Gift Tax Returns Checklist
- Non-Acknowledged Gifts: Many clients make “informal” gifts to children and perhaps others that...
Form 1065 Partnership Tax Checklist
Practitioners dealing with partnership tax returns face a myriad of complex tax issues. Additionally,...
Author E. Martin Davidoff, CPA, Esq.
Protect Your Client
You can view the first half of this article by visiting http://www.cpataxmag.net/davidoff-stories/42-e-martin-davidoff-columns/869-steps-to-effective-irs-audit-resolution....
Steps to Effective IRS Audit Resolution
When taxpayers receive the dreaded notice that their business is going to be examined by the Internal...
The American Taxpayer Relief Act of 2012
On New Year’s Day, Congress completed its compromise to avoid the fiscal cliff. Here are the...
Offers In Compromise Improving
On May 21st, the IRS announced major revisions to the Offer in Compromise program (http://www.irs.gov/newsroom/article/0,,id=257542,00.html)....
IRS Appeals in Collection Matters
The most underutilized arm of the Internal Revenue Service with respect to Taxpayer collection issues...
Dealing with the IRS Regarding Collections, Penalty Abatements and Examinations
In practicing before the IRS regarding collection matters, penalty abatements and examinations, I...
New IRS Procedures Claim to Provide 'Fresh Start' for Taxpayers
Over the past several weeks, the IRS has made some significant changes in collection policies and...
IRS Rules of Engagement: Under Promise and Over Perform
In practicing before the IRS regarding collection matters, penalty abatements and examinations, I...
IRS Rules of Engagement No. 10: Never Let Deadlines Pass
In practicing before the IRS regarding collection matters, penalty abatements, and examinations, I have...
Rules of Engagement: Dealing With IRS Installment Plans
In practicing before the IRS concerning collection matters, penalty abatements and examinations, I...
Amy Walsh
KPMG Herbalife Partner Resigns: A Case Study on Preventing Auditor Insider Trading
When KPMG audit partner Scott I. London accepted an envelope of cash from his golf buddy in the parking...
Still Have an Undisclosed Foreign Account? IRS Rattles Its Saber and Sweetens the Pot for Taxpayers to Come Clean
Touting the $5 billion in tax revenue generated by its offshore voluntary disclosure programs, the...
United States Continues Its Siege Against Swiss Banks
On February 2, 2012, the United States government made an unprecedented move in its unrelenting investigation...
Dodd-Frank Whistleblower: What Independent Auditors Need to Know
The SEC in May issued its final rules implementing the new whistleblower program of the Dodd-Frank...
Author Jerry Love, CPA/PFS
When Should You Begin Drawing Social Security?
This is a question that I am frequently asked by clients. Should they start as soon as they turn 62,...
Small Business Gets Tax Credit for Providing Health Insurance
The Affordable Health Care Act (AHCA) is being called the most historic overhaul of the U.S. health...
10 Tax Tips On Implications for Debt Forgiveness
In general, if you are liable for a debt that is reduced, canceled, forgiven, or discharged, you must...
14 Tips to Inderstand the Fundamentals of Annuities
An annuity is an investment option that many people find difficult to understand and frequently turn...
The HSA Alternative for Small Business to Address Health Care Costs
It seems that one topic that is on the forefront of every small business owner's mind this summer...
Defending the "hobby loss" Rule with a Business Plan
Internal Revenue Code Section 183 (Activities Not Engaged in For Profit) limits deductions that...
Student Loans Exeed Country's Outstanding Credit Card Debt
This is the time of year when many students will be graduating from college and anxiously looking...
Can Anyone Fund Their Own Retirement?
One thing that anyone active in a tax practice understands is that you must adapt to an ever-changing...
Financial Planning Starting with Form 1040
Without a doubt there is a wealth of information we already know about our clients’ financial status...
How to Turn Over Your Business Without Going Under
It has been estimated that approximately 90% of the businesses in the United States are closely held....
Golfer Sergio Garcia's Victory Over the IRS
The IRS has created an “Issue Management Team” within its International Individual Compliance Group...
Expanding Your Practice with Quickbooks Consulting
QuickBooks Consulting (QBC) fits neatly in the category of expanding your practice because it is one...
How to Create a No-Equity Partner Position in Your Small to Mid-Size Firm
Most firms are faced with the dilemma of keeping long-term managers who are major contributors to...
Tax Humor
They’re the 1% no one aspires to join: the small percentage of taxpayers who get audited by the IRS....
Tax Humor: The IRS Motto
IRS MOTTO: "We're not happy until you're not happy!" “Ignore them and they’ll go away” is...
CPAs Expand Into SOC 2 After Death of SAS 70
After SAS 70 audits were used improperly the AICPA replaced the standard with SSAE 16. While attempting...
Top 6 1040 Tax Software Solutions 2012
Changing 1040 Software Vendors If clients are the heart of tax season then 1040 tax software is the...
CPAs are Ready to Perform Reviews for Crowdfunded Startups
Reviews of financial statements will be in the eye of the storm when the JOBS (Jumpstart Our Business...
IRS Threatens Levy Despite Currently Not Collectible Status
- Details
- Written by E. Martin Davidoff
This is the eighth and final in a series of articles chronicling a real IRS matter. For details on what has transpired, please see the previous seven issues of this magazine.
Richardson’s letter of Feb. 6 was a standard letter (Letter 725) requesting that the client meet with him at 9 a.m. on March 3, 2009, to talk about unpaid amounts totaling more than $270,000. We found it odd that he did not even attempt to set up a mutually-convenient time and place.
In reply to Richardson’s letter, we pulled out the draft we had filed away the previous October (see Part VII) and supplemented it to bring Richardson up-to-date about Jim’s pending knee surgery and the loss of his job. We offered to meet Richardson but suggested in our letter that such a meeting probably was not necessary:
“As you will recall, Mr. Smith has just turned 66 years of age, and the probability of securing gainful employment in an amount sufficient to even meet his basic living needs is low. Accordingly, I believe that this case should be placed in uncollectible status.”
On Feb. 17, 2009, Richardson called and spoke with our paralegal, agreeing to place the case into currently not collectible status (CNC status) as long as we could provide verification of the medical procedure to be performed and the physical therapy required. Eager to finally resolve this matter, our client quickly secured a letter from his physician describing the procedure and explaining that he will convalesce for approximately three months and receive home physical therapy visits. We faxed this letter to Richardson. On Feb. 24, 2009, we received a detailed telephone message from Richardson saying that he reviewed the fax and that we sent exactly what he was looking for in this situation.
When a case is placed in CNC status, the IRS will take no collection action unless the taxpayer’s income changes. IRS policy is to revisit the taxpayer in two years to secure an update of his or her financial position. Sometimes such a revisit takes place within the stated time frame, but often a revisit never occurs. With a 66-year-old taxpayer, we figured that this case was finally done!
But, as you may recall, Jim had decided to sign up for Social Security benefits in January 2009, when he lost his job. You can probably guess what happens next. On March 23, 2009, we received 16 notices (CP 91) via certified mail.
Final Notice Before Levy on Social Security Benefits
The notices advised that the IRS may proceed to take 15% of Jim’s Social Security benefits to pay his overdue taxes. Jim could avoid this by either paying the tax or requesting a hearing. However, the notices were unclear about how to request a hearing and warned that the hearing might not stop the pending levy action. The notices also posed another possibility: Call the IRS and prove economic hardship. We already had done that!
The IRS’ central computers and Richardson were not in sync. Although Richardson knew that Jim had proved his economic hardship, Richardson had not entered this information into the computer; and he had no idea that another arm of the IRS was about to seize a portion of Jim’s Social Security benefits. This is a common flaw in the IRS collection machinery. Automated processes often take action in cases presumably under a revenue officer’s control.
In our case, we immediately called Richardson and asked him to block any further collection action by the IRS. We also filed a Form 9423, Collection Appeals Request (also known as a CAP Appeal), on April 2, 2009, to the origin of the levy notices, requesting Appeals consideration.
The CAP appeal was forwarded to Richardson, not to Appeals. On May 26, 2009, Richardson confirmed that the case was closed on his end and that the matter was placed into uncollectible status.
We never received written confirmation of our appeal or Richardson’s closure of the case. As I write this article, no IRS activity has taken place since May 2009, and Jim is awaiting 2016, when the IRS statute for collections will run out on the assessments.
Our firm has billed more than $10,000 in fees, which we are receiving at a rate of $250 per month. The IRS was offered $791 per month in February 2008 but rejected that offer and has received nothing to date.
Jim’s wife, Mary, sold the family home in 2009. Mary is working, and Jim is collecting unemployment. Jim and Mary are planning to retire to Florida this summer. For now, they are living here in New Jersey, spending time with their family and trying to make ends meet. For the time being, they are able to do so without the IRS breathing down their necks. But who knows how long that will last?
The End?
E. Martin Davidoff, CPA, Esq., is a practicing CPA and tax attorney in Dayton, NJ. He founded the IRS Tax Liaison Committee of the American Association of Attorney-CPAs and is the immediate past president of the AAA-CPA. Contact him at
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