“AUDITS” “ How to Represent Your Client in a 1040 Audit & CP2000 Issues ”

1. “AUDITS” “How to Represent Your Client in a 1040 Audit & CP2000 Issues” LG Brooks, BA, EA, CTRS February 14, 2017 Michael Rozbruch's Tax & Business Solutions Academy

2. Scope of the Audit • Scope – District Office and/or Campus “Classifiers” determine the scope (issues) of the Audit • Focus should be applied towards the “audit/exam issues” indicated via the initial appointment letter. Michael Rozbruch's Tax & Business Solutions Academy 2

3. The Assessment Statute • ASED - Assessment Statute Expiration Date • Tax required to be assessed generally within 3 years after filing • Assessment includes Tax, Penalty & Interest • Legal Cite: IRC §6501(a) & Treas. Reg. §301.6501(a) -1 Michael Rozbruch's Tax & Business Solutions Academy 3

4. Information/Documentation • IRS Information – The practitioner should secure all “relevant” info from the IRS for the tax year in question such as: • Wage & Income Transcripts • Record of Account (Account & Return Transcript) • TxMODA Transcript • Form 4564-Information Document Request (IDR) Michael Rozbruch's Tax & Business Solutions Academy 4

5. Interview of Client-by Rep • Client Interview : • “Thorough & probing” (See NOTE below) • Document any “exposure issues” identified • Utilize interview to fully develop all “facts & circumstances” of the exam year or years • NOTE: During the interview limit the TP’s ability to disclose potentially “fraudulent/criminal” issues Michael Rozbruch's Tax & Business Solutions Academy 5

6. Interview of Taxpayer by IRS Agent • Taxpayer Interview : • Decision to allow s/b made on a “case-by-case” basis • Goal of examiner is to identify any “discrepancies, fraud, inconsistencies, underreported income, etc. • Your “thorough & probing” interview should limit the impact of the Auditor demanding the appearance of your client Michael Rozbruch's Tax & Business Solutions Academy 6

7. Type Audits • Correspondence Audits-Tax Auditor (TA) • Office Audits-Tax Compliance Officers (TCO) • Field Audits-Revenue Agent (RA) • Eggshell Audit-Revenue Agent or TCO • CP2000-Tax Auditor or Tax Examiner Michael Rozbruch's Tax & Business Solutions Academy

8. Audit Exam Administration • Date & Time of ExamTreas. Reg. §301.7605-1(b)(1) • Place of ExamTreas. Reg. §301.705-1(d)(1) • Exception for Small BusinessTreas. Reg. §301.7605-1(d)(3)(ii) • Site VisitationsTreas. Reg. §301.7605-1(d)(3)(iii) • Place of Exam Change Request Treas. Reg. §301.7605-1(c)(1)(i-vi) • Right of ConsultationIRC§7521(b)(2) • Representative Holding POAIRC§7521(c) Michael Rozbruch's Tax & Business Solutions Academy

9. Attorney Client/Tax Advisor-PRIVILEGE • Privileged Information: • Established pursuant to IRC §7525 • Applies to any federally Authorized Tax Practitioner (FATP) • Assertion of “privilege” applies to any “non-criminal” tax matter pending before the IRS IRC §7525 (a)(2)(B) Michael Rozbruch's Tax & Business Solutions Academy

10. Audit Technique Guides • Created under the IRS’s “Market Segment Specialization Program” (MSSP) • Provides “guidance” (road map) to examiners pertaining to various business & industries • Discusses & explains-business practices, specific industry terminology, detailed analysis formats agent workpaper suggestions & requirements Michael Rozbruch's Tax & Business Solutions Academy

11. CP2000 Issues • CP2000 Notice generally informs the taxpayer of “underreported income” and/or “adjustments” to reported income • The “CP2000” is a type AUDIT • Publication 3498-A: “The Examination Process-Examinations by Mail” is always provided with the CP2000 Notice • Appeal Rights (via Pub 5) are also provided • CP2000’s are AUDITS Michael Rozbruch's Tax & Business Solutions Academy

12. AJAC • The “Appeals Judicial Approach Cultural” Project (AJAC)…..Effective September 2, 2014 • Effective with the adoption of the AJAC project all “Audit & Examination” personnel are required to • “Determine the statute date and ensure there are at least 365 days remaining on the statute prior to the case being forwarded to the Appeals Division”. • Prior to “AJAC” only 180 days were required to be remaining on the statute …Cite: IRM §8.2.1.4 & 25.6.2.8.1 Michael Rozbruch's Tax & Business Solutions Academy

13. 1040 Audits & CP 2000 Issues: • Points of Interest/Additional Issues: • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________ Michael Rozbruch's Tax & Business Solutions Academy

14. “AUDITS”“How to Represent Your Client in a 1040 Audit & CP2000 Issues” LG Brooks, EA, CTRS Michael Rozbruch’s Tax & Business Solutions Academy Thank you! Michael Rozbruch's Tax & Business Solutions Academy