Re: [tips_and_tricks] IRS administrative procedures
- At 5/25/2006 08:00 AM, you wrote:
I saw some good discussion recently (but now can't find it) about the
proper procedures to follow in the administration phase of
examinations with the IRS.
1. Informal inquiry about not filing a return. Typically a CP-515 (if you received interest/dividend payments) or a CP-518.
2. Some additional love letters might be exchanged.
3. An audit report, which is the Form 4549. The Form 4549 means an audit has occurred. Because non filers filed no return, that means the thieves must make a section 6020(b) return. These returns essentially are dummy returns, but that is an issue for another day.
4. Pursuant to administrative procedures, the alleged taxpayer is supposed to be provided an opportunity to request an examination interview.
5. If there is no resolution to the dispute, the thieves then issue a 30-day proposed assessment letter. With that letter the alleged taxpayer is supposed to be provided an opportunity to request a formal appeals office hearing.
6. If dissatisfied with the evidence and testimony presented at the hearing, and the appeals officer determines that there is a deficiency in taxes paid, the thieves then issues a 90-day notice of (proposed) deficiency. With that letter the alleged taxpayer is informed of several options, the most popular of which is petitioning the tax court to review the notice and issue a deficiency redetermination. The trial is de novo and is not a mere judicial review of an administrative process as commonly circulated.
7. After the tax court judge issues a decision, if there is deemed a deficiency, then the process moves into the collections phase.
8. The thieves then must issue a formal assessment. Taxpayers may request a copy of the assessment record pursuant to section 6203. Notice I no longer use the term "alleged taxpayer." That is because once there arguably is a lawful assessment, the issue is dead. The person is deemed a taxpayer.
I have a question about that. I received (last year) a 4549 "proposed
changes" AND a 30 day letter at the same time (even though they are
suppose to be separate events). I responded with a request for office
examination interview and then an appeals hearing (since they sent
both at same time).
I have noticed that some of the recent "30-day letters," specifically those issued from Ogden, Utah, are not 30-day proposed assessment letters. The author of the letter states that the recipient has 30 days to respond, but there is nothing in the letter that indicates that the letter is the traditional standard 30-day proposed assessment letter. The Ogden people seem to have been tasked with pursuing a zero tolerance policy toward non filers, which includes some additional deceit. The Ogden people are not mailing informal queries but seem to be going direct for the jugular with these deceptive 30-day letters.
One note. I have seen some people recommend that any written response for an examination interview or for an appeals hearing should be blatantly identified as a PROTEST letter. I suspect that kind of heading on the letter does help, but I have not pursued to see if there are any regulatory weasel words that require any such heading.
They said they would get back to me in a month, never did (imagine
that). Anyhow one year later, I received a NOD. NO examination
interview, no appeals hearing.
So now what am i suppose to do?
Go to tax court (for only taxpayers) where it sounds like i have no
chance of winning? Or do I bring an APA action in district court?
How am I suppose to get my due process rights?
The wide spread story about tax court that the court is only for "taxpayers" is a fallacy. Granted, the overwhelming number of petitions are by taxpayers as defined, but the court is not designed in that manner. With respect to a NOD, the tax court judge only determines whether a deficiency exists. Nothing more, nothing less. If the petitioner presents credible and trustworthy evidence that no deficiency exists, then the judge will rule accordingly. Most non filers lose simply because they head to court armed only with legal arguments rather than facts and evidence.
If you have a copy of your letter requesting an examination interview and an appeals hearing, and the letter was mailed certified or priority such that you possess evidence of mailing the letter and the thieves having received the letter, then consider petitioning the tax court for declaratory judgment. Get a copy of the court rules from the tax court web site. The issue at bar is whether the thieves can issue a NOD without honoring a person's request for the examination interview and appeals hearing. This is a due process issue.
Do not go near anything that looks like a tax protester argument. The only issues you want the tax court judge to address are the issues of due process.
Just last month (April) the tax court issued a declaratory judgment that the thieves cannot proceed to collections without issuing a NOD; Manko v CIR, 126 T.C. No. 9. You can obtain a copy of the decision at the tax court web site. Unlike much myth and fallacy, if a tax court petition is written correctly AND the petitioner comes to court with evidence and not "time worn tax protester arguments," the tax court judge will side with the petitioner.
I do not recall any tax court declaratory judgment regarding this aspect of due process, but I suspect that there is a better than an even chance of receiving a favorable decision. If so, then the entire case is essentially remanded back to the stage at which you were supposed to have your examination interview. The tax court judge does not possess jurisdiction to remand back to the examinations phase, but by voiding the NOD, the result is essentially the same.
With that said, know that statutorily Congress has set only the bare minimum of due process requirements and that minimal bar is the statutory notice of deficiency. However, rules 26 CFR 601.103 and 601.105, along with numerous IRS publications, such as 1, 5, 556, 594, and 3498, all indicate that the Secretary of the Treasury has initiated additional due process requirements that are binding on the IRS. That kind of objective documentation should serve well as evidence to argue the point that you were denied meaningful due process.
Do know that with the NOD you have 90 days to respond to that notice with the appropriate response. If you fail to respond then you will be found in default and the process converts to the collections phase. If you are not judgment proof then you have no option but to respond properly to the NOD. However, if you are still early within the 90 day period, you can quickly petition the tax court for declaratory judgment. The tax court judges will expedite that hearing because petitions for declaratory judgment do not require a trial
If you are unsure that all of this can take place timely, then submit your petition as a response to the NOD. Do not play games with that notice. In parallel petition for declaratory judgment regarding the due process issues. If the judge decides favorably regarding the due process issues, and the case is essentially remanded back to the examination interview phase, then you can motion to dismiss your petition to dispute the NOD. Make sure you ask the judge to word the declaratory judgment decision in such a manner because you also have the NOD petition at bar.
This is strictly my opinion. Standard weasel words apply. IANAL, etc.