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7 Habitual Mistakes Companies Make – Chapter 4 (11)

TaxConnections Blog Post
What Should Taxpayers Do When the IRS Queries Their Tax Affairs? –

FIRSTLY, IT IS recommended that any request for information or documentation be reduced to writing as this will help set the parameters of the audit going forward.

The taxpayer should also check which tax years are involved and which taxes.

Where the IRS requests information beyond a typical three-year period, a defense may lie under the appropriate tax provision that a statutory limitation period may apply where a taxpayer may successfully argue that it does not have to provide any information or documentation, as the period for raising any additional assessments may have prescribed in that the original tax assessment has become final and conclusive. Obviously, the taxpayer must be confident that it had been properly transparent when the original tax return was submitted to the IRS.

For the IRS to go beyond a three-year period, they would usually have to show that there has been fraud , misrepresentation, or nondisclosure on the part of the taxpayer.

The IRS can also be requested to advise for what specific purpose, in terms of the appropriate tax legislation, the inquiry is being conducted.

These requirements are usually spelt out in the relevant tax legislation. Any conduct by the IRS that falls outside the scope of their powers, as specifically legislated, may entitle the taxpayer to review their conduct in court.

In accordance with Circular 230 Disclosure

International Tax Attorney, EA, US Tax Court Practitioner in the USA, Counsel of the High Court in South Africa, adjunct Professor of International Tax at Thomas Jefferson School of Law.

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