Get it done the first time

TIGTA, the Treasury Inspector General for Tax Administration is the IRS's watchdog. They look over the activies of the Internal Revenue Service to see if IRS is using time and resources effectively, and treating taxpayers reasonably.

TIGTA recently released a study about an experiment in tax collection generating audit candidates by creating a list of folks with substantial mortgage interest who have not filed tax returns. You can read the details of the report in Gail Perry's column.You can read about taxpayers who have been hit by IRS and California in today's Tax Watch column at MarketWatch.com.

In the course of researching the article, I had conversations with some interesting people. One of them Larry Rubin, CPA, a partner at Aronson & Company in Rockville, MD. He articulated a philosophy that I've been intuitively practicing (without specific thought), that seemed worth bringing to your attention.

  • In dealing with IRS and other notices, make your first response complete enough to close the government's file and to settle the issue.
  • Some tax professionals tell me, in frustration, that once they get a notice from IRS and respond, it turns into a never-ending series of letters, which sometimes escalates a simple matter into a matter of real concern.

    Digging deeply into the communications that Tax Pro had with IRS, you learn that their response was superficial, overly cautious, and did not including documentation to support their replies.

    Rubin looks at this way. They are going to ask for the back-up or supporting documents anyway. Why not simply give them the proofs they need to accept your position, in the first place? He writes up a brief, but detailed reply explaining why his client is right, or why there is no error.

    When Larry brought that up, it made me realize not everyone operates that way. While that has always seemed the most natural way to handle correspondence to me, I've come to see that this isn't as intuitive for everyone. Somewhere along the way, some firms started training their staff to suspicious or cautious of government notices - and provide only the briefest, most superifical responses. The attitude is, volunteer nothing; let them ask for it.

    That's a bit outdated these days, don't you think? And perhaps a bit counter-productive? I suppose it works from the viewpoint of folks who haven't taken the time to learn how the notice process works, or are more afraid of the IRS then their clients are.

    If you're feeling that you don't really know how to deal with the flood of notices coming in, and all the expanded, targeted audits IRS is conducting, you can learn. Have your ever heard of NTPI - the National Tax Practice Institute? Each summer NAEA runs a series of courses to train you to handle all aspects of representation. The people I've advised to attend all come back enthused - and well-informed.

    In the meantime, you can also find a great deal of information in the archives of Tax Talk Today.

    This blog

    Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.

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