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...

Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...
Being an accountant doesn't mean you're giving investment advice to clients. However, at tax time, accountants often have to deal with the results of any investment advice clients obtained during the year—the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
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.