Attorneys Beware: The IRS is Looking For You!

The IRS has just published new Specialized Guidelines for Attorney Examinations. These guidelines will enhance the attorney audit guidelines already available in the IRS Market Segment Specialization Program, a program which is designed to train IRS examiners as specialists in particular industries.

The purpose of the new guidelines is to help IRS examiners identify non-filing and non-compliant attorneys. A recent test in the San Diego area disclosed that more than 10 percent of attorneys in the area were non-filers.

As part of the new program, the IRS will search for non-filers by using computers to check state and county bar associations as well as the national Martindale Hubble Directory, matching attorney names with those filing tax returns.

The guidelines point out that personal injury attorneys are often an excellent source of tax collection because of the advanced client cost adjustment usually made by the IRS. The advanced client cost adjustment is based on the fact that costs paid by attorneys on behalf of clients are actually loans to clients and do not qualify for a tax deduction.

The guidelines also include essential information about the record keeping systems used by attorneys. A list of questions is included in the guidelines that IRS auditors are to use in their initial interview with an attorney.

Finally, the guidelines offer information about the IRS position concerning attorney-client privilege. Fee arrangements, for example, are considered to be outside the scope of the privilege.

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.