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...

The law makes it difficult for itemizers to deduct medical expenses. To reap any write-off, you must pay bills that aren't covered by insurance, reimbursed by employers or otherwise satisfied by, for example, a company-...
Drug patents held overseas can pare makers’ tax billsAs the Obama administration tries to stop companies from avoiding taxes by moving their headquarters overseas, the makers of some of the world’s most lucrative...
Starting in October, the IRS will send warning letters to tax return preparers who appear not to be complying with Earned Income Tax Credit (EITC) due diligence requirements.Section 6695(g) of the Internal Revenue Code...

Already a member? log in here.

Upcoming CPE Webinars

Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.