We welcome back commenter in chief Bob Kamman writing today about his experience in a Tax Court case. One of the benefits of going to Tax Court is getting an attorney from Chief Counsel’s Office assigned to the case. While not everyone will have a perfect encounter with the attorneys from Chief Counsel’s Office, dealing with them to fix a problem beats almost any other option offered in trying to fix a problem with the IRS. Sometimes, paying the $60 to get to a Chief Counsel attorney can be worth the cost of admission. If something goes wrong with the client’s case that relates to a year in Tax Court, don’t try to fix it by calling the place at the IRS that made the mistake or contacting the Taxpayer Advocate’s office, go straight to the Chief Counsel attorney, who will almost always be able to fix the problem with a lot less effort than it would otherwise cost you. Keith
I’m Nobody! Who are you?
Are you – Nobody – too?
About 20 months and one pandemic ago, I complained here about how IRS did not timely answer a Tax Court petition I had filed.
I feel better now. I’m not the only one IRS ignores. They ignore Tax Court orders also.
read more...The tardy IRS answer was filed shortly after the blog post appeared. Judge Gustafson initially rejected it because it was not accompanied by a motion to request late filing. IRS Counsel filed a “motion for leave to file out of time answer,” it was granted, and the case proceeded two weeks later.
This case arose from a CP-2000 notice dated July 22, 2019, involving omitted income from a 2017 return. IRS initially proposed an assessment of $4,761 plus interest. On August 6, 2019, we provided documents showing the actual amount owed was only $2,847.
Two months later, the response from IRS was to issue a notice of deficiency dated October 15, 2019, for the same $4,761 shown on the CP-2000. This happened shortly after the end of the fiscal year, but I’m just guessing that timing had something to do with it.
My experience has been that IRS never rescinds a notice of deficiency, even though they have a form (8626) for agreeing to that. As Janet Hagy, a CPA in Austin wrote here, “obtaining a rescission is not an easy process. In most cases, it is probably more expedient to just file a Tax Court petition and use the Appeals process to resolve the case.”
So, in November 2019, my clients sent a check for $2,847 to IRS, identifying it as an advance payment under Section 6603. At the same time, we bought the $60 ticket to Tax Court and filed a petition. Chief Counsel’s January 2020 answer was late, but after that, they were quick to agree with us and stipulate to the $2,847 amount already paid.
On March 3, 2020, Chief Judge Foley signed the stipulated decision that the tax due was $2,847. This was one of his last actions before Covid-19 shut down the Tax Court building and then trials everywhere, within weeks.
My clients had paid the tax, but I told them to wait for a final bill from IRS before paying the exact amount of interest owed. They received a bill and paid it. I should have told them to let me review the bill, but what could go wrong?
What went wrong is that IRS in Ogden, Utah issued a revised CP-2000 five months later, on August 17, 2020, proposing an assessment of $3,057. A tuition tax credit was still being disallowed, although we had addressed that issue with them a year earlier. Then on September 14, 2020, like computer clockwork, a CP-22A first collection notice demanded payment of this amount, less the advance payment of $2,857. My clients paid the additional $210, along with $297 interest, and I did not discover the error until I heard from them again in April 2021 to prepare their 2020 returns.
By then it was a year into the pandemic. I mailed a letter on April 7, 2021, to the Counsel attorney who had handled the case, explaining what had happened and enclosing copies of relevant documents. There was no response.
So, on May 20, 2021, I filed a Form 911 asking my local Taxpayer Advocate for assistance with correcting the error. There was no response to that, either. Such has been my experience in other requests for Taxpayer Advocate help. I attribute it to my lack of academic or tax-clinic credentials.
Surely, I thought, the Tax Court must have some rule governing enforcement of its decisions when IRS ignores them. All I could find, though, was Rule 260, which deals with a “proceeding to enforce an overpayment determination.” There had not been an overpayment determination; my clients had agreed there was a deficiency. They had paid the exact amount ordered by the Tax Court decision. Our problem was with the IRS decision, which was to ignore the case history and demand more tax.
Fortunately, an unexpected development allowed me to suspend my search for possible Tax Court relief. The letter I had sent to the Counsel attorney at his last known address was returned to me as undeliverable, several months later. I checked the Tax Court docket online, and physical addresses no longer appear there. The only contact information is an email address.
So, I emailed my request for help. A couple weeks later, a paralegal specialist called and left a message that they are working on fixing the problem.
Maybe I’m not such a nobody, after all.
Just as the Code authorizes the IRS to rescind a notice of deficiency, it authorized the IRS to rescind a TEFRA FPAA. Bob, back in the 1980s, I actually got the IRS to rescind an FPAA in sufficient time so as to avoid my filing a Tax Court petition. I confess, I seriously doubted that the IRS would sign the rescission form in time. So I was prepared, on a moment’s notice, to file a petition.
Seeing the rescission process work (just barely), I never again tried to get a notice of deficiency or FPAA rescinded, since, as you point out, time pressures make it almost impossible.
I receieved a CP2000 notice a couple months ago and responded by the due date with paperwork to show insolvency at the time of the tax year. I actually had a bankruptcy. My wife had education debts that were written off as well. So, of course the IRS deemed that as income after the fact as taxes had already been filed for the year before we received a notice that the education loans had been written off. Not that it mattered because we had no money to pay said taxes because we suffered bankruptcy. My response to the CP2000 notice was ignored/not responded to and I was issued a CP3219A that I received in the mail today, Certified. This notice now says that I owe the original amount plus interest and does not even address my response to the CP2000 notice. I assume at this point I need a tax attorney to go to tax court, which I cannot afford either. Is it typical for them to just ignore responses even though it encouraged me to respond? Can I go to tax court without a tax attorney? The total amount is $3,292. I find it hard to believe I will be able to get an attorney for less than this. Is that why the IRS does this? Knowing that in many cases it is more difficult to fight than to pay?
Look to Pub 4134 for a clinic near you if you qualify based on the income criteria. About 75% of Tax Court petitioners represent themselves. The Tax Court is accustomed to unrepresented taxpayers who explain their issue the way you have in this comment.