Nothing new here, except to the Taxpayer Advocate (TPA). Since I have been doing representation, it has been ingrained in me to always get the person that I am talking to — badge number and name — when dealing with the IRS.
In a recent blog post, National TPA Nina Olsen was dismayed. At a Congressional hearing before the Subcommittee on Oversight of the Committee on Ways and Means in May, she was asked about what guidance is provided that taxpayers could rely on. Her reply, it’s not an easy answer, resonated with me.
Let’s attack this from a professional level. You call the IRS for a client and they give you advice. You then get the person’s name and badge number, but doing this really has no significance whatsoever, because IRS employees are not responsible for the advice they give.
The crux of the hearing focused on the FAQ Section of the IRS website. The FAQs are not to be relied upon because they aren’t considered “Published Guidance.”
If you think about this for a second, you might envision a person completing their tax return. They go to IRS.gov and read the FAQ section to get help with a tax question, but the answer they receive can never be relied upon.
Using that on a much grander scale and as professionals, we look to Revenue Agents (RAs) and Revenue Officers (ROs) to at least give us the correct answers. But even they aren’t on the hook for the answers they are giving.
At least we have the option to notify the Appeals Department, where an Appeals Officer (AO) will weigh the Hazards of Litigation, meaning they determine whether the case will cost more to litigate or handle in appeals.
If you call the Practitioner Priority Service (PPS), they will tell you while you are waiting on hold that they are not responsible for any advice they give. That is fine for us. We already know that and would have already done our homework, but what about the general public? In fact, why isn’t the FAQ Section of IRS.gov just removed altogether, or at least include a disclosure?
I had an audit once that the RA wanted to set for April 15. I told him that the 15th was impossible, but he insisted. I got his manager’s name and address and sent her what the Code says, that an audit meeting must be set for a time that is good for both parties.
The manager sided with the RA and he set the appointment, which was two weeks away.
I didn’t show up, and an audit report was issued denying all of my client’s expenses. I immediately appealed it, and the AO kicked it right back to audit with the same person. I eventually had it moved to another RA. If professionals are being treated this way, I can’t imagine what the general public must have to face.
The point is that if the TPA is just now realizing this disconnect between the IRS and the public, then a much better job needs to be done.
The TPA was borne out of the 1997 Congressional hearings about the IRS’s aggressive tactics. I like to refer to the TPA as the police of the IRS, and I personally have always had great success with them.
But the general public doesn’t have the time to search the Internal Revenue Manual (they probably don’t even know what that is!).
Is it really their job to research and rectify erroneous advice given to them by IRS staffers? It certainly seems in cases such as these that the penalties incurred by the taxpayer should be waived.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice for almost 23 years. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.